Blockbuster was founded by David Cook in 1985, with the first store opening in Dallas in Oct. of 1985. He sold the company in 1987 to Wayne Huizenga and two other partners. In 1989 Mr. Huizenga took Blockbuster public and it grew from 19 stores doing $7 million in sales, to over 3,700 stores worldwide and $4 billion in sales. Blockbuster was sold to Viacom in 1994 for $8.4 billion.
Blockbuster developed to fill a simple need originally. People want to watch movies in the comfort of their own homes. When the video player was finding its way into people’s home, a new industry started to emerge. Many mom and pop video shops were popping up on neighborhood street corners to fill the void. With a well stocked video store people had less reason to go to the movies, and with home entertainment centers becoming affordable, the TV screen was large enough to negate that advantage that the theaters had in the past. What Blockbuster could do that the mom and pop shops couldn’t, was provide massive amount of available movies. This allowed them to become a virtual giant in this industry.
When the DVD player hit the scene it only enhanced the value of video stores, and Blockbuster in particular. Now movies were made in a cheap format, yet with much higher viewing quality. Now renting movies became even more popular. Blockbuster enjoyed massive prosperity until the next generation of renting came along.
Along with movies, Blockbuster offers gaming rentals. This is a great way to test out a game you might want to purchase and is very popular. Of course along with renting these games and movies, you can buy the movies or games as well.
The new age in renting became an online venture. Upstart Netflix offered movies for rent online. They would mail you the movie (very quickly); you would watch it and mail it back. This new mode has two distinct positives over going to the video store. First is the fact that you don’t have to leave your house to get a movie. Second is the fact that there are no late fees. Netflix operates on a monthly subscription basis. So, if you have a membership for one movie you can keep that movie as long as you want (provided your membership is in good standing), with no late fees. This was always a battle ground at the video stores where the customers would feel “raped’ by the exuberant late fees they could incur. With the Netflix model this wasn’t an issue.
Blockbuster has eventually followed suit, and has adopted much of the Netflix model. They offer movies online, much like Netflix, with the bonus that you can go to any store and get movies immediately as well. They also have adopted the monthly subscription and dropped the late fees.
Even with these adjustments, Blockbuster has fallen on hard times. Netflix has take n the wind out of Blockbusters sails and slowed its dominance of the movie and gaming industry. Blockbuster still is a giant in the industry but Netflix has brought them back to a bit of reality as the company must now regain its balance.