From 1985 until the early 2000’s, Blockbuster Video was the movie and video game rental powerhouse that lead the market in nearly every state in America. The company became the top in its market almost overnight. In 2004, the company’s peak period, they had roughly 60,000 employees working at more than 9,000 stores nationwide. The first Blockbuster opened in October of 1985 by founder David Cook. Within a short few years, Cook grew the business incredibly and brought it public on New York Stock Exchange. Before long, Blockbuster stores were popping up in neighborhoods across the country (Hyatt, 2003).
Blockbuster thrived until competition from other companies offering more convenient means of movie and video game rental began taking over the market. Foremost among these competitors was Netflix, a provider of streaming video and on-demand rentals directly from the internet. Netflix dealt a huge blow to Blockbuster with cheaper pricing for media entertainment, while providing a more convenient means of obtaining that media entertainment – be it from home or through mail order (Smith, 2015). Another Blockbuster killer came in the rise of Redbox. Redbox specializes in Blu-Ray, DVD and video game rentals for only $1 per day, and were utilized through storefront kiosks meant for simple and expedient human-machine interaction. Redbox’s began popping up in 2002 all across the country as abundantly as Blockbuster once had. Again, the convenience and price decrease offered from Redbox to consumers perpetuated the beginning downfall of Blockbuster Video.
Some of the missteps that Blockbuster made ultimately lead to their being bought out of bankruptcy in early 2011. First, in 1999, Blockbuster had a $5 billion IPO, and when Netflix began bursting at the seams, they had the opportunity to buy Netflix out. Instead, they practically laughed at the then small but growing company (Siegler, 2011). Another failure for Blockbuster came in the way of management. As the store essentially became a ‘convenience’ store of sorts with the implementation of candy and throw away toys, the digital technology did not help to prompt people to come in for visits, except for the few hit releases that came a few times each year (Baskin, 2013). Instead, Blockbuster should have had associates become recommenders and catalog persuading de factos. Another fatal mistake was the procrastination that Blockbuster deployed in getting into the online DVD rental business. By the time they decided to get into the online racket in 2004, Netflix was already powerhousing the market and Redbox had recently launched. Blockbuster was dead in the water, and their utmost tragic mistake was in the arrogance Blockbuster officials displayed in underestimating the newly founded competition. They had a six year span to take on the changing market and counter their competition, but decided instead to sit around and let their company slowly sink.
Blockbusters form 10-k for the SEC in late 2011 showed incredible shareholder losses and rendered the all but unforeseen failure of the company as a whole. As mentioned before, Dish Network bought out most of the company’s shares while they were entered into the court systems with a full-blown chapter 11 bankruptcy. Although Blockbuster has made efforts to remain visible in the market with kiosks similar to Redbox at several retail locations and even a website where media can be streamed on-demand and rentals are offered in the same manner as Netflix, the company has simply lost it’s presence in the wake of their failure to take changing competition head on in the early part of this decade. Blockbuster’s stock is at an all time low, and hardly any hope remains that they can retain the monumental status they once held in the movie and video game entertainment industry.