Blockbuster Videos Inc., formerly Blockbuster Entertainment, Inc., (also known as Blockbuster Video and Blockbuster, LLC) is an American-based rental service for movies and video games. Traditionally, they offered rented out this media on magnetic tapes (8-track & VHS) and optical disks (DVD & Blu-ray) from brick-and-mortar stores, as well as a DVD-by-mail service and a cinema theater. Later on, they also began offering media streaming and in-name-only on-demand video service.
Founded in 1985 by David Cook, Blockbuster began to expand domestically and eventually on an international level into the the 1990s. When Blockbuster was experiencing "peak performance" of employees and profitability according to their public records, Fall 2004 was this time period. During this time Blockbuster employed 84K people worldwide, 31 percent of those employees were in the United States, for a total of 9,094 stores.
Competition from the mail-order video services, easily accessible automated kiosks, video on demand services were the publicly known reasons for the downfall of the video empire. Based upon new research more evidence shows the single biggest mistakes is when Blockbuster spun off of Viacom taking an insurmountable $905 million loan to pay a special dividend to Viacom shareholders for the privilege, were major factors leading up to Blockbuster's eventual demise. Progressively, Blockbuster began to lose significant revenue during the 2000s. Blockbuster officially filed for bankruptcy protection in early 2010. In 2011, Blockbuster's remaining 1,700 stores were bought by satellite television provider Dish Network, eventually selling off its last corporate-owned Blockbuster stores in 2014 leaving a handful of franchise-owned stores and as of 2020, only 1 U.S. based store left and 2 international stores left.
Slogans
- "To play is human. To rewind is Divine"
- "Be Kind, Rewind"
- "Bring The Good Times Home"
- "Wow, what a difference, Blockbuster Video!"
- "Make it a Blockbuster Night"
- "That's all Folks!"
Revenue sharing agreements and Business model
The standard business model for video rental stores of old was to pay a large flat fee per video, at approximately $65, and offer unlimited rentals for the lifetime of the medium itself. Prior to 2002 Blockbuster has said late fees account for 15 percent of its revenue as part of it's business model. Essentially movie studios sold VHS tapes to rental companies like Blockbuster for about $65 apiece, so a store had to rent out each tape about 30 times to make back the money.
American billionaire businessman and media magnate Sumner Murray Redstone, whose New York based Viacom Inc. conglomerate companies then owned Blockbuster, had personally spearheaded a new revenue-sharing arrangement with a few studios, starting with his at the Viacom owned Paramount pictures between Blockbuster video in the mid-1980s. Blockbuster reported rental information through Rentrak, a global media measurement and research company serving the entertainment industry. Blockbuster's revenue sharing would be at little-up front costs allowing the video store giant to keep 60% of the rental fees, paying approximately 40% to the studio it had agreements with on many new releases. In addition to benefiting from a lower initial price, Blockbuster also capitalized on the fact that movies were generally not available for purchase at affordable pricing during initial new home video release periods. Thus customers had a choice to rent from Blockbuster, wait, or buy the film on tape at the much higher (MSRP) Manufacturer's Suggested Retail Price targeted at other rental chains and film enthusiasts, which was pricey and ranged between $70–$100, depending on the film title. Examples of revenue sharing between Blockbuster and the Hollywood studios were as follows: On August 25, 1998 Columbia-Tristar Home Video owned by Sony Pictures Entertainment Inc. and Blockbuster Videos Inc. agreed on a revenue sharing agreement that lasted 4 years. Within this agreement is a Sony Pictures "Share of Rental Revenue period" paid by Blockbuster to them. This 26 week period that Sony Pictures profits from is approx 40% revenue sharing starting from the new release date of the video until the end of the 6 week new release video period. Furthermore $2.00 US Dollars of the Upfront Price shall be deducted from Sony Pictures's share of rental revenue for each video copy, typically the total cost was $3.25-$3.75 per video copy, leaving the rest of the profit for Blockbuster within the 26 week New release period. After the 26 week period Blockbuster is free to sell of copies of the rental picture once this Revenue sharing period expires. Blockbuster would typically keep in their older library 3-4 copies of the film and sell the rest off as a (PVT), Previously viewed tape. The standard business model for video rental stores had traditionally been to pay a large flat fee per video, approximately $65, and offer unlimited rentals for the lifetime of the medium itself. Sumner Redstone, whose Viacom conglomerate then owned Blockbuster, personally pioneered a new revenue-sharing arrangement for video in the mid-1980s. Redstone's plan, Blockbuster would buy videos for a relatively low cost, kept 60% of the rental fee, paying the other 40% to the studio. It then reported the rental information through Rentrak. In addition to benefiting from a lower initial price, Blockbuster also capitalized on the fact that movies were generally not available for purchase at affordable price points during initial release periods. Thus customers had a choice to rent, wait, or buy the film on tape at the much higher Manufacturer's Suggested Retail Price targeted at other rental chains and film enthusiasts, which at that time ranged between $70–$100 per title.
Prior to 2002 Blockbuster has said late fees account for 15 percent of its revenue as part of it's business model.
Overall unprofitably, Debt and the rise of DVDs
According to research done up to the release of an article by Bill Murphy of Inc.com on October 12,2019, from 1996 to 2010, Blockbuster video was only profitable during two years within the time frame. Between 2002 and 2006, Blockbuster lost approximately $4.4 billion dollars.
In 1994, Viacom Company purchased Blockbuster Video, and as Ben Unglesbee reported for Retail Dive, ten years later, Blockbuster spun off, but had to take out a $905 million loan to pay a special dividend to Viacom shareholders for the privilege.
If not for that debt, a former analyst suggests to Unglesbee, "it (Blockbuster) probably would have survived a lot longer."
It wasn't just that DVDs were lighter less costly to manufacture and mail. It's that studios priced them lower -- making it not much more expensive to buy a DVD than to rent one at Blockbuster.
Tests Plan to Offer Unlimited Rentals for Fixed Fee
In 2002 The Wall Street Journal reported Blockbuster Video's plan in the 2002 summer to test a subscription service allowing consumers to rent all they can watch for a fixed monthly fee, the company's most direct response yet to the threat posed by various direct-to-home video services on cable and satellite television systems. The 2002 test was in two markets that would give its customers more flexibility in choosing and watching movies. One proposed subscription service would let consumers pay a fixed price such as $19.99 or $29.99 a month to rent a limited number of movies simultaneously and keep them for as long as they like, with no late charges. After returning the movies, subscribers could take out more movies, allowing them to watch as many as they want for the same fixed price. The service is virtually identical to one operated since 1999 by Netflix Inc., which says it serves more than 600,000 subscribers, providing only DVDs and using the mail rather than physical stores. Blockbuster denied its plans were a reaction to Netflix's service. Blockbuster also planed to test another variation of the subscription service, in which consumers would paid a flat annual fee of $49.99 for the right to keep movies they have rented for several weeks without paying late fees. Under this plan, consumers still would pay at the counter for each individual movie (an average of $3.75 for a new-release movie).
Quantity and selection of titles
Blockbuster stores followed a strategy of emphasizing access to the most popular new releases, obtaining early access and stocking many copies of the new-release titles, with a relatively smaller depth of selection than traditional independent video stores. Much of the shelf space in the stores was devoted to popular titles that were placed relatively sparsely on the shelves with the entire front cover visible, so customers could browse casually and quickly, rather than having a more diverse selection with fewer copies of each title. Blockbuster often time butted heads with studios to get an edge on earlier access to new movies/videos than other companies could succeed at. Blockbuster became the exclusive rental chain for new releases from big name studios as in Paramount Pictures, Universal Studios, The Weinstein Company, Disney, 20th Century Fox, MGM, Sony, Warner Bros. plus many more.
History of the franchise
1985–1997: David Cook
Sandy Cook, David Cook's wife, liked the idea of renting videos as a business model, shortly thereafter, the Blockbuster concept took off, and her husband would soon study the video industry and future ways to conquer small mom and pop videos stores after taking over the larger competitor video chains. Profitability from their sale of David P. Cook & Associates, the subsidiary of Cook's company, The husband and wife decided to approach a local Dallas video store called Video Works with the hopes of getting fully into the Dallas Texas video store franchise. The Cook's upon running their own Video Works, had asked corporate to allow them to paint the interior of their store a yellow and blue color with a specific design. Te corporate response was no. So the Cook's departed Video works, then proceeded to open the first Blockbuster Video as an incorporated company officially in Fall 1985 in Dallas Texas. With early successes from the Blockbusters expansion and new stores opening under the company name, Cook built a $6-million video warehouse in Garland, Texas.
Nintendo of America, Inc. v. Blockbuster Entertainment. (1987) When home console video games from the likes of Atari, Nintendo Coleco-vision, etc. boomed in popularity in the 1980s, Blockbuster rented specifically Nintendo games out to their customers, too. Gaining ground as the largest Video game manufacturer, Nintendo, sued Blockbuster for copyright infringement over copies of their video game manual booklets that came with each video game cartridge. Nintendo claimed Blockbuster was doing unauthorized rentals of Nintendo video games as a was a violation of federal law. Ultimately the two parties would eventually settle the matter out of court, with Blockbuster retaining the legal right to continue the practice. Nintendo won the case, based on the fact that Blockbuster had included photocopies of the original instruction manuals with its rental NES carts. Blockbuster unsuccessfully argued that it was only protecting its investment in the original manuals, as it would cost more to replace the originals than it would to photocopy replacements. In this particular part of the case, the courts found in favor of Nintendo, therefore Blockbuster was required to start providing the original manuals with its rental games. Blockbuster still wouldn't be forced into doing this practice so thy would only provide the manuals if a customer specifically asked for one form the back of the store or if one was available in a drawer. Still early on there were only 19 Blockbuster stores, and the upward potential attracted Wayne Huizenga's associate John Melk. Gaining Melk's attention due to Blockbuster's efficiency, business model, family-friendly image and he convinced Huizenga to have a look at it. Huizenga and Melk utilized techniques from their waste business and Ray Kroc's model of expansion to rapidly expand Blockbuster, and soon they were opening a new store every 24 hours. In 1987, Huzienga and the two partners purchased a controlling interest in Blockbuster Entertainment for $18.5 million and began setting out to acquiring video store competitors like the Las Vegas video-superstore chain Major Video and Movies to Go, a 29-store chain based in St. Louis. They took over many of the existing Blockbuster franchise stores as well, and Huizenga even spent much of the late 1980s acquiring several of Blockbuster's rivals.
In 1990, Blockbuster bought Erol Video Club's mostly on the East coast totaling 250 stores from owner Erol Onaran. Shortly thereafter, Blockbuster acquired the Music Plus music retail chains and created Blockbuster Music in 1992. The same year Blockbuster acquired Sound Warehouse.
- 1993, Blockbuster acquired control of Spelling Entertainment Group Inc. in a $141.5 million stock swap, expanding its reach in home entertainment programming. took a controlling interest in Spelling Television-Entertainment Group, The Spelling TV Group also owned 35% of Republic Pictures; that company merged with Spelling in April 1994.
Wayne Huizenga was worried about how new technology could place a threat to Blockbuster's business even though Blockbuster had become a multi-billion-dollar company. In 1991, Huizenga decided to sell Blockbuster to Viacom Inc. Soon after in 1994 and for over $8 billion to help finance, Viacom Inc. and Blockbuster Entertainment Corp. agreed to merge as part of a last minute joint effort to inhibit a marriage between QVC (Quality Value Convenience) TV Network and Paramount Communications Inc. in their bidding war.
The Blockbuster Block Party aimed at adults, was test-marketed in two U.S. cities in 1994. The Block party consisted of Pool Tables, a large jungle gym with a ball pit, an arcade, laser tag, but ultimately Blockbuster killed the idea and the concept was bought by Paramount and renamed "Paradise Island".
In 1996 Blockbuster Video Inc., was merged into the parent company Blockbuster Entertainment Inc. which had earlier replaced the Blockbuster Entertainment Company. Later that year, Blockbuster Entertainment Inc. merged into a new Blockbuster Entertainment Corporation and the retail stores, formerly known as Blockbuster Video, were renamed Blockbuster. Earlier before selling the company, Huizenga moved Blockbuster's headquarters for a few years to Fort Lauderdale, Fla., until it moved back to Dallas, Texas in 1996.
1998-2007: John Antioco era
In 1998 DEJ Productions was founded by Dean Wilson, Ed Stead and John Antioco. DEJ was named after the first initials of three top Blockbuster executives at the time, which acquired 225 films primarily to provide exclusive content to its Blockbuster stores before selling it off to First Look Studios in 2005. During that same year, Blockbuster acquired the Republic of Ireland and Northern Ireland video rental stores called Xtra-vision, with over 200 stores in Ireland and in the UK. In Ireland, but not in the U.K, the Blockbuster name was not used as market research showed that the Xtra-vision name was better known and more respected than Blockbuster there.
In 1998, Warner Bros. chief of the Home video division, Warren Lieberfarb, offered Blockbuster CEO John Antioco an exclusive proposal rental deal when DVD's were on the rise as the newer rental model, giving VHS a back seat. Lieberfarb offered the creation of a rental window for DVDs, during which new release movies on DVD, not VHS would not be available for purchase immediately, but only available for rental. The enormous opportunity on the table was declined by Blockbuster. Retail Giant Walmart was offered a sell-through, not rental opportunity shortly thereafter selling the new release DVDs first and soon Wal-Mart replaced Blockbuster by the year 2003 as the Warner Bros. Studios single largest source of revenue with other retailers like Kmart, Target etc. soon following the money making model of new releases. Notably Blockbuster's business model was severely impacted due to not taking this deal with the Warner Bros. studio.
An optional, paid membership for one low annual fee brings Blockbuster members valuable benefits for an entire year, starting nationwide in 1999 after a test in 1998. A loyalty program rewarding Blockbuster's most loyal VIP rewards members officially called "Blockbuster Rewards" allowed customers to earn free rentals, but not all new releases. The reward program included one older video library title each month from the category renamed and known as Blockbuster Favorites.
Viacom sold the lackluster Blockbuster Music chain to Torrance California-based Wherehouse Entertainment Inc. for $115 million dollars in the late Summer of 1998, which was subsequently purchased by Trans World Entertainment in 2003.
In the Summer of 2000, a contract for a 20-year deal between Enron and Blockbuster was made as an exclusive deal that aimed to sell movie-on-demand services, including 500 titles, on its Eron's broadband/fiber-optics network by the year's end. Less than a year later in March 2001, Enron terminated the deal, but publicly relaying information that executives at both companies said they would pursue video-on-demand services on their own or with other partners. Also in the same year 2000, Reed Hastings approached the Blockbuster CEO John Antioco and asked for $50 million to take the company he founded, Netflix. Blockbuster made one of it's well known biggest mistakes by not agreeing to buy Netflix.
In 2002, Blockbuster made several purchases, including Dallas based Movie Trading Company and U.K.-based Gamestation.
In late 2004, Viacom Inc. announced the structure of the planned spin-off of its Blockbuster Inc. video retailer subsidiary. Additionally Blockbuster launched an online DVD rental service aimed directly at undercutting competition from Netflix. The DVD subscription was introduced on Blockbuster.com, also known as Blockbuster Online while also rolling out its in store "Game Rush".
At its peak in 2004, Blockbuster had had 60,000 employees more than 9,000 stores in the America alone.
In May 2005, activist investor Carl Icahn waged a successful proxy fight to add himself and two other members to Blockbuster's board. Icahn would accuse Blockbuster of overpaying chairman and CEO John F. Antioco, who had served in that capacity for 8 years (since 1997), receiving $51.6 million in compensation for 2004. Icahn was also at odds with Antioco on how to revive and keep the Blockbuster brand relevant. This pushed John F. Antioco to scrap late fees, start an internet service, while Icahn wanted to sell out to a private equity firm. Also in 2005, Blockbuster began a campaign promoting its "No more late fees" policy. The retailer Vintage Stock acquired the Movie Trading Company name from Blockbuster in 2006.
During a Superbowl commercial a billion-dollar campaign called "Blockbuster Total Access" was introduced in 2007 as a strategy against competitor companies, namely Netflix. Blockbuster customers could get DVDs from Blockbuster through the mail, but with Blockbuster, have the option of using brick-and-mortar stores, as well.
Through Blockbuster Online customers could rent a DVD online and receive a new movie for free when they returned it to a Blockbuster store. While it was a major success every free movie cost the company two dollars, but the goal was to entice enough new subscribers to cover the loss. Netflix felt threatened, and Hastings approached Antioco with a suggestion to buy Blockbuster's online business. In return, a new system would be introduced where customers could return their movies to a Blockbuster store. Before the deal could be realized, board member Carl Icahn intervened, refusing to let the company lose more money through Total Access. Antioco was pushed out in July and replaced with James Keyes, who rejected Hasting's proposal, raised the price of online DVD rentals and put an end to the free movie deal. As a consequence, Blockbuster Online's previously massive growth quickly stopped. Antioco's departure reportedly also involved continued controversy over his compensation. He left with a $24.7 million severance package.
Blockbuster Online Rentals at the Time of Cancellation or Termination from their website read as follows: The rental period for BLOCKBUSTER Online Rentals is the Membership Term remaining as of the date of rental. All outstanding rentals must be received by Blockbuster no later than 10 days past the end of the Membership Term. If an outstanding BLOCKBUSTER Online Rental is not received by Blockbuster on or before 10 days after the expiration of the Membership Term (the “Sale Date”), the BLOCKBUSTER Online Rental will be automatically sold to you and Blockbuster will charge your Payment Method for the applicable disc(s) the AutoSale price (as hereinafter defined) of the product on the Sale Date. The “AutoSale price“ for all movie and television show discs shall be $19.99 plus applicable tax.
2007–2011: James Keyes era
On July 2, 2007, Blockbuster named James W. Keyes as its newest chairman and CEO. Keyes was the former president and CEO of 7-Eleven. as the new chairman and CEO. James Keyes set out to raise money for the marketing and store improvements that Blockbuster so desperately needed when he took over. Additionally there was now for Blockbuster to focus on a shift to streaming video with the acquisition of MovieLink in September 2008.
Early in 2008, News of Blockbuster's bid for Circuit City, valued at up to $1.35 billion surfaced. After a thorough review of Circuit City's financial books, Blockbuster withdrew its offer in July 2008.
At the beginning of 2010, Blockbuster had over 6,500 stores, of which 4,000 were in the U.S.— a number that fell to 3,425 in late October the same year after Blockbuster announced that it would cease all its operations in Portugal, closing down 17 stores, it started becoming a downfall into a number of stores closing as a trend. Carl Icahn officially resigned from Blockbuster's board of directors selling nearly all his remaining Blockbuster stock.
The liquidation of Movie Gallery began in May 2010, eliminating Blockbuster's primary competitor. During the same month a dissident shareholder, Gregory S. Meyer, in an effort to be elected to Blockbuster's board of directors, engaged in a proxy battle with Blockbuster's board, alleging that the board had been responsible for significant destruction of value to shareholders. Meyer was elected to the board shortly after, on June 24, 2010, at Blockbuster's shareholder meeting in Dallas.
On July 1, 2010, the company was delisted from the New York Stock Exchange. The suspension and delisting of Blockbuster shares came after a failed attempt to get shareholders to agree to a reverse stock split because of the stock's trading at well below $1 per share. Ultimately the stock was then traded on the OTC Bulletin Board (over-the-counter bulletin board).
Unable to make a $42 million interest payment to bondholders, Blockbuster was given until August 13, 2010, to pay off the debt.
On September 23, 2010, Blockbuster filed for Chapter 11 bankruptcy protection seeking to shed its onerous debt and due to challenging losses, $900 million in debt, and strong competition.
At the time of its Chapter 11 filing, Blockbuster said it would keep its 3,300 stores open; however, that December it announced it would close almost 200 more stores by the end of April 2011 in attempts to emerge from bankruptcy.
In 2001 Dish Network eventually won an auction, agreeing to buy Blockbuster for $320 million and the assumption of $87 million in liabilities and other obligations. Ultimately that year Dish announce it was keeping only 500 Blockbuster stores open. Later Dish Network would tell the U.S. Bankruptcy Court that it needed additional time to negotiate with landlords in an effort to keep more than 600 Blockbuster stores open. Blockbuster's landlords objected to its assumption of leases.
2011–2015: Michael Kelly era
On May 6, 2011, Keyes resigned as Blockbuster's CEO. Blockbuster announced Bankruptcy and was officially sold to cable provider Dish Network for re-construction, moving to Englewood, Colorado and bringing in Michael Kelly, a Dish executive, as Blockbuster's President. It's corporate name was then renamed Blockbuster LLC.
In September 2011, it was announced that Blockbuster and Dish Network would launch a new service called Blockbuster Movie Pass at US$10 per month. With the Movie pass the members would have access to both a streaming service, movies and games-by-mail. The package was only available for subscribers of Dish Network's pay-TV service, and it eventually folded.
On January 13, 2012, Dish CEO Aaron Kask announced that while Dish had planned to keep 90% of the stores in operation, meaning around 15,000 employees would remain employed, because of market factors "there are ones that aren't going to make it. We will close unprofitable stores. We will close additional stores." Kask did not say when these additional closings would happen and only remarked that some stores were unprofitable. The Dish chief would not say which stores the company was planning to close, but that each potential closing was to be assessed on a "case by case basis".
On October 4, 2012, Dish Network announced that it was scrapping plans to make Blockbuster into a Netflix competitor. On January 16, 2013, Blockbuster UK entered into administration and Deloitte was appointed to run the business while trying to find a buyer while some of the stores remained open. Between November 6, 2013, and January 12, 2014, all 300 remaining corporate-owned Blockbuster stores in the U.S. were closed and the DVD-by-mail program was shut down.
2015–present: post-Kelly era
The company still maintained its Blockbuster on Demand video streaming service along with a Blockbuster@Home television package for Dish Network subscribers until 2015, when both were replaced by DISH Network's own brand of on Demand video streaming service, the DISH Movie Pack. The company's continued decline was attributed to poor leadership according to others in the industry. Ken Tisher, owner of one of the few remaining Blockbuster stores, said, "Blockbuster, if it isn't already, is going to go into the Harvard Business Review for how not to run a business, or how to run a business into the ground." Keith Hoogland, owner of Family Video, said a lot of poor decisions was a primary reason the company did not survive. Dan Rayburn of StreamingMedia.com stated that "everything about Blockbuster was set up to fail". Jonathan Salem Baskin, a former Blockbuster marketing communications executive, said, "Digital would have changed Blockbuster's business, for sure, but it wasn't its killer. That credit belongs to Blockbuster itself."
Blockbuster store closures aroused considerable nostalgia and "would draw crowds of more than 100, as customers came to buy movies in the store’s inventory they couldn’t find anywhere else and revisited memories of shopping at Blockbuster". Originally reported by the Blockbuster Fan Page, just one store was left open as of March 2019 in Bend, Oregon, notably there's two stores still open in the country Italy. This last United States store houses Russell Crowe movie props which John Oliver had donated to an Alaska store. A documentary that was still currently in production by two Bend filmmakers, had a goal to get their film "on the shelf at Blockbuster while there still is one." The Bend store has attracted visitors from around the world as a "living history museum" as the video rental store was "once a mundane feature of everyday life [but] is now a retro novelty experience".
The Last Blockbuster
To this day there is still one stand alone Blockbuster Video store in business in the United States, there's still two Blockbuster Video stores open in the country Italy as of today as well. The store for all intensive purposes looks like the real classic stores and has much of the same merchandise and of course movie, television, and video game rentals, but is privately owned, franchised. A documentary on the last remaining Blockbuster Video in Bend, Oregon was released by Production Companies Popmotion Pictures and September Club on July 7, 2019.
Blockbuster-Pop-Up Location at Japan LA in little-tokyo of Los Angeles, California
From July 12-14 2019 The storefront location of Japan LA in little-tokyo of Los Angeles, California opened its doors from 12pm until 8pm Pacific standard time. Notably this was the first time on record where a blockbuster location didn't close at it's business as usual customery midnight closing time, not including major holiday exceptions. You could RSVP your intended plans to be present on their website or phone app in an effort to gauge the popularity and so the operators could plan on how many guests they would received in addition to marketing the three day event. Streetwear brand Dumbgood partnered with Blockbuster via this pop-up in Los Angeles, as well as bringing their merchandise to ComplexCon 2019.
Blockbuster-Pop-Up Location in SoHo neighborhood of New York City
Streetwear brand Dumbgood partnered with Blockbuster, which is still owned by Dish Network, for an apparel collection available online, and is currently being sold at a pop-up shop in New York City’s SoHo neighborhood. Amelia Muqbel Dumbgood’s co-founder and creative director, stated “We wanted to both recreate part of a Blockbuster but then also have enough room for all of our merchandise, and just have everything have its own place and time to shine,”. Stepping into the pop-up, ‘90s fans are instantly transported back to the iconic video rental store. Tall shelves of VHS tapes are visible, and a popcorn aroma wafts through the air. The 15-piece collection was displayed throughout the store as a followup to the L.A. Pop-up earlier in July.
Blockbuster video, Christianity and Family oriented content dilemma
Since Blockbuster's founding in 1985, the chain refused to stock Pornographic adult films in order to portray the brand as family-friendly. However, the company did carry Motion Picture Association of America film rating system-R-rated and unrated films. Christian youth groups and even Christian patrons would see Pamela Anderson's Unrated version of "Barb Wire", Unrated version of "Live Nude Girls", and the 1995 American coming-of-age film "Kids", which received an NC-17 rating from the MPAA, but was later released at Blockbuster Video without a rating under critical responses from Christians and family organizations. The 1988 Martin Scorsese film "The Last Temptation of Christ" was condemned by virtually every Christian denomination...was protested, picketed, subject to boycotts and bomb threats, and excluded from the titles carried by the Blockbuster Video chains.
Other ventures
Blockbuster Entertainment Awards
Blockbuster Entertainment Inc. ran an awards show annually from 1995 to 2001 called the Blockbuster Entertainment Awards. In November 2001, Blockbuster announced that it would cancel the 2002 award show following concerns about viewership and celebrity attendance after the September 11 attacks.
Blockbuster Express
Blockbuster Express was a movie-rental kiosk brand sublicensed for use by licensee NCR Corporation. In 2011, nearly 10,000 Blockbuster Express kiosks were in operation. Apart from the license to use the Blockbuster brand name, Blockbuster Express kiosks are unrelated to Blockbuster LLC, its stores, its DVD-by-mail service, or its online streaming service.
The names Blockbuster Express and Blockbuster Video Express had also been used for certain Blockbuster retail stores in the United Kingdom.
GameRush
In the summer of 2003, Blockbuster started converting some stores to GameRush stores. These stores sold and bought DVDs, games, game consoles, and accessories. GameRush was positioned as a direct competitor to stores such as GameStop and Game Crazy. Blockbuster used its location status to get instant coverage; it also promoted these stores by hosting video-game tournaments, special trade-in offers, and a more 'hip' look to the selection and staff. However, when Blockbuster introduced the discontinuation of late fees, GameRush was put on the chopping block. In April 2007, GameRush stores were reduced back to just a games section.
Discovery Zone
In 1993, Blockbuster invested in the indoor kids play restaurant Discovery Zone. In 1995, Blockbuster bought more stock to take control of the company. Discovery Zone abruptly closed half of its locations in 1999 and sold thirteen others to the parent company of Chuck E. Cheese's. The rest of the Discovery Zone locations closed in December 2001.
International operations
Italy
Blockbuster Italy, back when it was a popular world wide brand, was a joint venture between Silvio Berlusconi’s conglomerate empire and Blockbuster in the mid 1990’s, which was later sold back to Blockbuster around 2002. There are two Blockbuster Video stores still open to this day in Italy. The owner of a store in Florence, Italy, run under the Blockbuster name with no ties to Dish Network or to the original Blockbuster, has reportedly said he had struck a deal with a now-defunct Blockbuster affiliate to use the brand.
Australia
In Australia, the first Blockbuster store was opened in 1991 in Melbourne. In 1992, the Virgin Group and Blockbuster Inc entered into a joint venture to set up Australia's first Virgin Megastores in Sydney, Melbourne, and Adelaide. This lasted until Virgin sold its interest in the six stores to Blockbuster, which promptly rebranded them in 1993 as Blockbuster Music. In 1994, Australian store numbers rose to 54 with the acquisition of Major Video and Focus chains in both Victoria (Australia) and South Australia. In 1995, the growth continued with the opening of the 100th video store in the country. By the end of 1998, Blockbuster Australia opened over 125 stores. In July 1998, Blockbuster Australia launched into franchising with the conversion of the former Video Flicks franchise group in Queensland, and the former Movieland group in Western Australia six months later. Also in 1998, the company sold its last two Australian Blockbuster Music stores in Pitt Street, Sydney, and Chapel Street, Melbourne to Brazin Limited, which incorporated them under its Sanity Entertainment brand. Throughout 1999 and 2000, Blockbuster Australia quickly expanded its franchise store network through the conversion of smaller groups and the granting of individual franchises. Before 2005, this was done through the acquisition of the Movies Plus Group and the conversion of some individual Movies 4U and Movieland outlets.
In February 2007, Blockbuster sold its entire Australian store network to Video Ezy Australasia Pty Ltd. At the time, Blockbuster Australia comprised 370 outlets nationwide—29 owned by the company and 341 owned by franchisees. Video Ezy had 518 Australian outlets, all of them being owned by franchisees, pushing the combined group's market share to 40% of the country's video rental sector. Video Ezy committed to the master franchise agreement with Blockbuster for 10 years operating the brand with the possibility of renewal for a further 10 years after that. As a consequence of the deal, the company changed its name from Video Ezy Australasia Pty Ltd to Franchise Entertainment Group (FEG).
In October 2010, FEG transferred control of the Video Ezy Australia and Blockbuster Australia online businesses to its newly acquired and reorganized company, Élan Media Partners, leaving FEG to manage the franchise relationships with individual Video Ezy/Blockbuster outlets. However, since the two brands came together, the network has shrunk, reflected in Video Ezy/Blockbuster franchises closing 270 stores across Australia in the four years to August 2011.
Additional store closings would go on for several years, until all the stores in Australia had closed, although vending kiosks with the Blockbuster logo were in operation. Australia's last Blockbuster store, in Morley, Western Australia, was closed at the end of March 2019.
Brazil
Blockbuster was the largest video rental chain in the country, but finances were not good enough due to high rental prices. Lojas Americanas, the largest Brazilian department store, acquired half of the shares and now it is named under "Americanas Express Blockbuster". The store layout was similar to a regular American store with a Game Rush, but instead of games it offers electronics goods like computers and DVD players, groceries like candies and microwave popcorn, and even toys from Mattel and Hasbro's board games. In January 2007, when Blockbuster had 127 stores across Brazil, it sold its Brazilian stake for $87.4 million and gave Lojas Americanas exclusive rights to the Blockbuster brand in the country for 20 years. The average store has an interior on about 400 m2, where 80-100 m2 is dedicated to movies.
Canada
In Canada, Blockbuster Canada (established in 1990) had operated independently, and it initially remained financially stable. It began a partnership with Wind Mobile in December 2009, selling mobile phones at all stores in cities where Wind's service was available. Phone sales began in Toronto and Calgary, later expanding to other cities with Wind coverage. In late 2007 Blockbuster Canada came out with a new program that rewarded customers for their in-store movie purchases with e-coupons. The loyalty program, called Movie Buyers Bonus was free to join while Blockbuster had 447 stores in Canada at the time.
On May 25, 2011, it was announced that 146 stores, accounting for approximately 35% of the company's stores in Canada, would be shut down effective June 18, 2011. On August 31, 2011, when no buyer could be found for its remaining stores the liquidators announced the closure of the remaining 253 Canadian stores and shutting of the entire Canadian unit.
Denmark
Blockbuster came to Denmark in 1996 with the acquisition of the 29 Christianshavn video stores. In 2009 they were on its peak with 72 stores across the country.Blockbuster Video Denmark sold the rights for the Blockbuster brand to the Danish telecommunications corporation TDC in 2013, excluding the 46 remaining brick and mortar stores which continued as RecycleIT A/S, diversifying in refurbishing and reselling consumer electronics in addition sale and rental of games and movies. The original goal was to rename all the stores before July 1, 2014, when TDC would get the exclusive rights to the brand name in Denmark, but only 12 of them had been renamed at the end of June and RecycleIT A/S filed for bankruptcy the same year. The 12 RecycleIT stores were bought by the company Blue City. The new owners planned to gradually phase out game and movie sales and rental within 2016, but due to the fast changes in the market it happened almost immediately after the takeover, and seven of the stores, therefore, closed in 2015. In 2017, the five remaining ones had started to make some profit, and focus exclusively on second-hand consumer electronics. However, the Blockbuster On Demand service is still active in Nordic Countries, offering both unlimited streaming and 48-hour rental of films online. Several Smart TVs have the Blockbuster app pre-installed out-of-the-box, and it is available on a variety of streaming devices such as Google's Chromecast.
Germany
Blockbuster opened 20 stores in Berlin and Munich and announced plans to open 250 more. The chain presented itself as family-friendly by not renting pornographic films. However, that decision adversely affected the profitability of the stores. Blockbuster left the German market in 1997.
Hong Kong
In 1998, after the closure of KPS Video Express, Blockbuster saw an opportunity to enter into the Hong Kong market, and entered into negotiations with KPS's receivers Ernst and Young to buy the KPS operations. Blockbuster re-opened 15 of 38 former KPS stores by February 16, 1998, KPS members were given special offers to join Blockbuster, but the video pre-paid coupon system was not retained. Blockbuster pulled out of the market in 2004 after high operating costs and losses to copyright infringement.
Ireland
In March 2010, Blockbuster announced that it intended to sell all operations in Europe. The company once had an Irish subsidiary, Xtravision, which did not operate under the Blockbuster brand name. Blockbuster sold Xtravision at a loss in August 2009 to Birchhall Investments Limited. All remaining stores were closed in 2016, leaving only its online business and vending machines.
Israel
In the late 2000s at its peak, Blockbuster Israel had 40 branches and more than 260 automated video rentals.In December 2011, Blockbuster closed off its last branch store, and had only 80 automated video rentals left.
Japan
In March 1991, Den Fujita Den Trading (which was the master franchise owner of McDonald's in Japan) and Blockbuster Inc entered into a joint venture to established Japan's first Blockbuster Video stores. By October 1992, Fujita and Blockbuster opened 15 stores in the country – four of them next to McDonald's outlets and most being located in the Greater Tokyo Area Unlike Blockbuster's U.S. stores, each Japanese outlet only occupied about half the floor space at 5,000 square feet due to the country's more limited available real estate. By June 1996, 32 stores were in operation with a public aim for 150 by 1998. Blockbuster Japan faced heavy competition from Osaka-based video rental chain, Tsutaya (video store), with its 817 outlets, but the company saw opportunity in the population having high VCR ownership levels (at around 75%), low satellite TV penetration (at around 27%), and well-ordered store layouts (unique for most local video stores). However, Blockbuster's business strategy of "wholesome home entertainment" saw it not stock adult entertainment or extreme Horror movies which account for 35 percent of the Japanese video market. That meant Blockbuster was unable to fit into the Japanese market adequately, and was put at a disadvantage to other businesses selling and renting these movies. Blockbuster handed its remaining shares over to Fujita Den Trading in 1999, and exited the Japanese market.
Mexico
In September 2015, all remaining Blockbuster retail stores (263 in total) in Mexico had been converted to "The B Store", and the floor space dedicated to video rentals reduced from 70 percent to 20 percent, the remaining space being used for general technology and electronics sales. The re-branding occurred with the owners not renewing their license with Blockbuster and the imminent expiry of the existing license.
New Zealand
In 1994 Blockbuster opened it's first stores in New Zealand. The chain also operated for many years in the country, but all stores there have closed. Other Independent stores who started in the late 1980's like Aro Video, a landmark in Wellington’s Aro Valley and Video Ezy, whom at one time was a large chain of 171 stores, have still hung on with a handful of stores in the country. Video Ezy who used to compete with Blockbuster, has less stores now than United Video, which is still operating with multiple stores across New Zealand.
Norway
In December 2002 the first Blockbuster store opened in Norway, and was followed by another store some months later in 2003, both located in Oslo. The hope was to acquire an already existing video chain. When that failed, it was made an attempt to build a Norwegian blockbuster chain from scratch. But both stores closed in the spring of 2004.
Peru
In 2007, Blockbuster announced that it plans to shut down its stores in Peru due to poor revenues, which it blamed on the effect of movie copyright infringement|piracy. The company had already closed down its stores in Ecuador, Portugal and Costa Rica. El Salvador followed in 2010, and Argentina in 2011.
United Kingdom
In the late 80's and into the 1990's Blockbuster expanded in the Brittan (United Kingdom), acquiring Europe's largest rental firm Ritz Video for $135 million. The stores were re-branded to Blockbuster, making it the largest British rental chain after the 875-store changeover to Blockbuster. By 2013, Blockbuster reached it's peal there with 528 locations in the United Kingdom.
Online rentals
United States
In 1997, Enron Corporation had entered the broadband market, constructing and purchasing thousands of miles of fiber optic cables throughout the United States. In 2001, Enron and Blockbuster Inc. attempted to create a 20-year deal to stream Video on demand over Enron's fiber optic network. However, the "heavily promoted" deal fell through, with Enron's shares dropping following the announcement.
On August 11, 2004, Blockbuster introduced a "DVD-by-mail" service in the U.S. to compete with the established market leader, Netflix. Blockbuster stated on record that in order to more actively participate in the growing market for online rental subscription services, they would launch "Blockbuster Online". This would be a subscription service in the United States, officially released in August 2004. The U.K. operations launched its online subscription service a few months prior in May 2004. These internet-based services allowed customers to rent DVDs by mail and offer substantially more titles than their stores, including a wide array of both new release and catalog DVDs. Additionally, BLOCKBUSTER ONLINE subscribers receive two free in-store rental coupons each month that can be redeemed for movies or video games. In contrast to their in-store subscription service, their online subscription services required significant ongoing subscriber acquisition investment in order to tap into the growing market and claimed to build a customer base large enough to allow this portion of their business to be profitable. As of March 9, 2005, Blockbuster had more than 750,000 "Blockbuster Online" subscribers, and made plans to invest heavily in this business during 2005 with a goal of having over two million subscribers by the end of the first quarter of 2006 at a substantial profit. Furthermore Blockbuster Online's plans were to further accelerate subscriber acquisition efforts.
Blockbuster's U.S. online operation started with around 10 warehouses; further expansions every year brought that number to 41, plus more than 1400 stores in the Blockbuster Online network. Most Blockbuster independent franchises did not honor the Total Access program. The company had 1.5 million subscribers at the end of the third quarter of 2006. Blockbuster's move to follow the business pattern with its online rentals as was established by Netflix prompted Netflix to sue Blockbuster for patent infringement. Blockbuster counter sued with a counterclaim alleging deceptive practices with its patent which it alleged was designed to maintain an illegal monopoly. The suits were eventually settled, and while the terms were not disclosed it was later reported that Netflix recorded a settlement payment from Blockbuster of $4.1 million in the second quarter of 2007.
Blockbuster offered several online movie rental plans. In some cities customers could add games to their movie rental queue as if they were included in their plan, but game rentals resulted in a separate additional fee which was not displayed or charged until the end of the billing cycle. Until July 26, 2007, Blockbuster offered and advertised unlimited free in-store exchanges of online rentals with all plans. Since then there were several changes back and forth with regard to this policy; in March 2010 customers were allowed a limited number of in-store exchanges.
At the end of 2006, Blockbuster Total Access had 2.2 million customers, exceeding their original goal of 2 million, according to its website. After an aggressive media campaign that accounted for much of Blockbuster's $46.4 million net loss in the first quarter of 2007, the Total Access subscriber base surpassed 3 million customers in total, marking the company's highest subscriber growth quarter ever.
On January 5, 2007, Southern Stores Inc., one of Blockbuster's largest franchise operators in the United States, filed a lawsuit in federal court alleging that, by introducing Blockbuster Online and Blockbuster Total Access, the rental chain has undercut the group's franchise agreement.
On August 6, 2010, Blockbuster By Mail subscribers gained access to Blockbuster's library of console games, in addition to movies and television shows.
On March 31, 2012, Blockbuster On Demand removed support from set-top box media players, including Vudu, Western Digital Media Center (WDTV), and Roku. Supported devices now only included computers, Blu-ray players, select television sets, and cellular phones.
On February 26, 2013, Roku, Inc. announced that Blockbuster On Demand was being launched on Roku's channel store. Supported devices now included computers, Blu-ray players, select television sets, cellular phones, and the Roku set-top box.
In November 2013, Dish Network said its DVD-by-mail service would shut down by mid-December.
United Kingdom
Rentals cost £3.50 to £4.50 and lasted for five nights, usually from Monday to Friday due to the postal service. Late fees of £0.70 to £0.90 per disc applied if a disc was not returned on time.
In May 2004, Blockbuster also introduced an online subscription service. The unlimited three-disc plan cost £14.99/month but did not allow in-store exchange, contrary to the U.S. service. Partial support for in-store exchange was added in April 2005 with the launch of an "OnlineXtra" service. This service cost £2 per month, required an online subscription to a disc plan, and added two extra discs sent by mail. The OnlineXtra discs could be exchanged in store, but the non-OnlineXtra discs could not. The program was discontinued in 2006 with no grandfathering, but an in-store-only variant of it resurfaced in early 2008. A "Click & Collect" service launched in September 2010 allowed the reservation of Blockbuster movies in store, but the store's regular rental fees applied until the company added in-store exchanges in May 2012. Support for game reservations was added in November 2011.
In 2008, Blockbuster UK's website underwent an overhaul, with an online store; a retail store stock checker; improved search functionality; and a critically acclaimed layout. In-store pickup and exclusive titled were added in 2009. Some of the titles which had an exclusivity period at Blockbuster include Gran Torino, Changeling, Taken, and Knowing. Additionally, online rental downloads of Universal Pictures in the United Kingdom remains exclusive to Blockbuster. This provides an advantage to the rental company compared to its competitors HMV, Play, and LoveFilm.
In January 2010, Blockbuster UK launched an online blog. Improved search algorithms, product pages, and social network links were added to the site in April 2010. Blockbuster UK aired a monthly BB Insider online video show from May 2010 to January 2011 and launched an iPhone App in September 2010.
Throughout the year 2011, Blockbuster UK announced several price cuts along with a new Blockbuster loyalty card program. These price drops were followed by a price drop of the Blockbuster UK online pay per rent service.
Although some Blockbuster UK advertisements claim that the company no longer charges late fees, the fine print and/or voiceover clarifies that rentals will be charged an extra pound for every additional night. A "Top Ticket" feature was added in April 2011, allowing monthly subscription customers to rent an additional movie at no extra charge and to receive it before other movies they request. Support for online sales of used movie and game discs was added in July 2011. The Blockbuster UK website was enhanced in September 2011. During the following month, a new TV section was added to the website.
3D Blu-rays were added to Blockbuster UK in February 2012.
In May 2012, Blockbuster UK partnered with IGN to launch a new Blockbuster VIP Gamer loyalty program.
On January 16, 2013, Blockbuster UK entered administration, appointing Deloitte as company administrators, casting doubt over the future of their 528 stores in the country. An announcement was then made by Deloitte that 160 UK stores would close.
On February 13, 2013, Deloitte announced a further 164 store closures, leaving 204 stores trading in the UK. The business was sold to restructuring firm the Gordon Brothers Group on March 23, 2013. On October 29, 2013, Gordon Brothers filed notice of intention to appoint an administrator. On November 28, 2013, Blockbuster UK officially entered administration for the second time, and by December 2013, all stores were closed, as no buyer for the chain was found.
Brazil
In January 2006, Blockbuster Brazil also introduced an online rental service now featuring both DVD and Blu-ray plans. There were four Block plans available with prices ranging from R$34.90 to R$79.90. The 3-disc plan with unlimited exchanges was R$49.90/month. Unlike the U.S. service, there was no in-store disk exchange.
Movielink acquisition
On August 8, 2007, Blockbuster announced that it had reached an agreement to purchase Movielink. According to the 8-K filing by Blockbuster, the total purchase price was $6.6 million.
Advertising
In 1990, the year Penn State faced off against Florida State, Blockbuster's name was on the actual college bowl game in the first annual "Blockbuster Bowl" which drew more than 74,000 fans. Originally commissioned as the Sunshine Classic, it has undergone several name changes due to changes in sponsorship, which included Blockbuster from (1990–1993).
Super Bowl
One of Blockbuster's most well-known advertising campaigns was launched during the Super Bowl XXXVI in 2002. It starred the voices of Jim Belushi and James Woods as Carl and Ray, a rabbit and a guinea pig in a pet shop located across the road from a Blockbuster store. The first campaign ended in 2003. The Carl and Ray campaign started again in 2007 starting with a high dollar thirty second commercial slot during the first quarter of Super Bowl XLI. The 2007 ad again had the same voices from actors James Woods and Jim Belushi along with the addition of Alec Baldwin in the voice-over promotion piece of the business. Primarily this Superbowl commercial promoted movies through the mail under the official name "Blockbuster total access" with an offer for a free trial.
Misleading advertising
In 2005, Blockbuster launched a marketing campaign describing changes in its late fees policy and offering "No Late Fees" on rentals. The program sparked investigations and charges of misrepresentation in 48 states and the District of Columbia: state attorneys general including Bill Lockyer of California, Greg Abbott of Texas, and Eliot Spitzer of New York argued that customers were being automatically charged the full purchase price of late rentals and a restocking fee for rentals returned after 30 days. In a settlement, Blockbuster agreed to reimburse the states the cost of their investigation, clarify communication to customers on the terms of the program, and offer reimbursement to customers charged fees prior to the clarification. New Jersey filed a separate lawsuit and was not a party to the settlement.
The 2005 controversy came after a related lawsuit settled in 2002 in Texas. That lawsuit, alleging exorbitant late fees, led the company to pay $9.25 million in attorney fees and offer $450 million in late fee refund coupons (which were rent-one get-one-free coupons, and thus required the customer to make an initial expenditure). The company estimated that the coupons would ultimately cost about $45 million depending on the redemption rate; an attorney for the plaintiffs estimated the final cost at closer to $100 million at a redemption rate of about 20% (calculated based on a similar case in Michigan).
Such corrections were also sent to international stores such as those in Canada to prevent further lawsuits.
Blockbuster reintroduced late fees in the United States in 2010 under the name of "Additional Daily Rates". With this pricing scheme, rentals were once again limited to a certain number of days and accrued pay-per-day rates after the days allocated are exceeded.
Senior management history
- Michael Kelly, president: 2011–2015
- Dennis McGill, executive vice president and chief financial officer: 2010–2013
- Kevin Lewis, senior vice president and chief marketing officer: 2008–2012
- John F. Antioco, CEO: 1997–2007
- James W. Keyes, CEO: 2007–2011
- Karen H. Jolles, chief marketing officer: 1993–1997
Cultural do not do examples using Blockbuster
From Forbes Magazine calling out how the ten times what Blockbuster was worth then and not now in cultural cliche's to Fox news articles discussing how churches in America have failed to learn the lessons from marketplace companies such as Kodak and Blockbuster – change with the times or die. Blockbuster is the cliché American business success story that came crashing down because it didn't change with the times. Countless news articles and even corporate year end planning and performance meetings reference Blockbuster as the fatal flaw; an arrogance of being the only big name video store in town for too long. It's business model, which the company internally described as "managed dissatisfaction", had produced a wellspring of consumer resentment toward the enormous video chain over late fees, poor new release video selection sizes, and sometimes bad or selective customer service. At many of their largest and most well trafficked stores, like the Mid-Rivers Mall drive Blockbuster location across from the largest suburban shopping mall, in the St. Louis suburb of St.Peters Missouri, being a "top store" to "shut-down-store". During the height of the 1990's the Mid-Rivers Mall drive Blockbuster, this store went from one of the busiest and most profitable stores to being to one of the first stores to plummet as the least trafficked regional store in only a ten years time frame; before the fall of the franchise. Reasons, selective customer service, competitor Hollywood video and Netflix's beginning. Blockbuster store managers and employees like many other stores new by their own research showed that customers had to visit their highly trafficked, biggest, profitable stores, for approximately five consecutive weekends to get the video they wanted. New VHS tape/DVD releases would come out strategically on the slowest day Tuesday's. It was the anti-service in customer service that brought the demand of people wanting their 1st choice of video, the store not having it so they would still settle for a 2nd or 3rd choice video and keep coming back until they got their video and Blockbuster making money on the customer each visit. Or a lack of a visit for not returning the video on time and being charged a late fee to rent another video.
External links
- official website
- blockbuster terms and conditions page from their official website
- Wall Street Journal - ests Plan to Offer Unlimited Rentals for Fixed Fee
- United States Securities and Exchange Commision BlockBuster Inc. for the fiscal year end 2004
- Mankato's last Blockbuster video store closing
- Blockbuster takes over Japan L.A.-Little Tokyo
- Churches should learn from Blockbuster – change with the times, or die
- Dumbgood revives Blockbuster with apparel and pop-up stores opened in L.A. and N.Y.C.
- Revenue Sharing Agreement 1998
- 7 other things mattered more than Netflix killing Blockbuster
- Ritz Videos taken over by Blockbuster and slogan
- Blockbuster bowl and Wayne H. buying up Video chains in Vegas and St.Louis
- Camping World Bowl History of the Orgignal Sunshine classic college football
- Canada Loyalty rewards program
- Blockbuster stores still in Italy