Print 30 comment(s) - last by kondor999.. on Nov 13 at 11:20 AM

Internet killed the rental star

Once a giant of content distribution, Blockbuster's ride into the sunset has hit a major milestone with current own DISH Network Corp. (DISH) announcing the decision to close all 300 remaining video rental brick and mortar stores across the nation.  Also closing will be the by-mail DVD rental business, with the service ending in mid-December.

Together these moves will result in about 2,800 layoffs.  Blockbuster will continue to live on as a branded streaming content offerings from DISH -- including Blockbuster on Demand and Blockbuster@Home.

DISH President Joseph P. Clayton elaborates:

Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings.

The dream is over -- sort of -- but Blockbuster's streaming services will live on.

Founded in 1985, Blockbuster was the biggest video rental chain in 1997, when it reached 4,000 stores across the country and around the world. At the time it employed 60,000 employees.  Viacom, Inc. (VIA), which acquired Blockbuster in 1994, took it public in 1999 under the BBI ticker, retaining partial ownership.

Blockbuster peaked in 2004, roughly two decades after its first store opened, with 9,000 total stores globally and about 60,000 employees.  But ultimately, the root of Blockbuster's demise may have at least anecdotally lie in its controversial late fees policy.  In 1998 new company "Netflix" was born.

Blockbuster Video
One of the final 300 Blockbuster Video stores [Image Source: AP]

Founder and CEO Reed Hastings recalls in an interview:

I had a big late fee for 'Apollo 13.' It was six weeks late and I owed the video store $40. I had misplaced the cassette. It was all my fault. I didn’t want to tell my wife about it. And I said to myself, 'I’m going to compromise the integrity of my marriage over a late fee?' Later, on my way to the gym, I realized they had a much better business model. You could pay $30 or $40 a month and work out as little or as much as you wanted.

It turned out he wasn't the only one.  While it took a while to catch on, Netflix, Inc. (NFLX) (which went public in 2002), and later Redbox Automated Retail, LLC would slowly demolish Blockbuster's reign first by tapping in to public vehemence over Blockbuster's late fees, and later by capitalizing on Blockbluster's sluggishness in moving into the digital content delivery space.  Oh, and Netflix's use of patent litigation helped to temporarily stall when Blockbuster did get serious about digital.  Blockbuster eventually did win the rights to launch digital services and cut its late fees, but that wasn't enough to save it -- by 2010 it was bankrupt.

Blockbuster helped Blu-Ray win by backing it in 2007. [Image Source: Akihabara News]

Arguably Blockbuster's last major contribution in the tech-space was its decision to back Blu-ray in 2007, a move that many felt at the time decided the high-definition war between Blu-ray and HD-DVD.  (Blockbuster also "almost" bought fallen consumer electronics retail giant Circuit City -- imagine that duo!)

In 2011 DISH bought BlockBuster at auction for $234M USD in cash.  By then only the 1,700 most profitable or desirably located of the 9,000 stores were still open.  In the years since, DISH has used Blockbuster's brand to push its digital content delivery efforts, but has slowly trimmed the Mail-DVD and retail presence as it lost customers. And here we are today.

For a slightly more detailed history see Quartz's "A Brief Illustrated History of Blockbuster..." (1985-present) and Reel of Time's "Blockbuster Facts" (1985-1998).

Sources: DISH, Quartz, Reel of Time

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Nothing but contempt for video rental stores...
By quiksilvr on 11/7/2013 4:58:24 PM , Rating: 5
Video rentals sucked my balls.

1) Never stocked new releases enough, making us having to wait over a week just to see the new movies.
2) Ridiculously overpriced because of it being the only Blockbuster in town.
3) Exorbitant late fees.
4) Poor selection to begin with.

I have nothing but contempt for Blockbuster or any video rental stores. Good riddance...

By spamreader1 on 11/7/2013 5:25:43 PM , Rating: 2
I don't miss getting tagged with late fees to movies I never rented (nor would have rented) either.

Wow, it's probably been a year since I heard the name Blockbuster. Nastalgia.

By Cypherdude1 on 11/8/2013 5:56:51 AM , Rating: 2
Ridiculously overpriced because of it being the only Blockbuster in town.
The BlockBuster in the little town I live in is also closing. Unfortunately, they are the only video rental store here. The only choices I have now are 2 Redboxes and Netflix. I don't really mind using Netflix, I used to be a member. I cancelled because I didn't want to watch movies on a regular basis anymore. Maybe I'll use their 2 out-at-a-time plan.

The last time I was a member of Netflix, several years ago, their streaming selection was very poor. They had virtually NOTHING to choose from.

By Souka on 11/8/2013 5:49:10 PM , Rating: 2
Years ago...when DVDs were just hitting Blockbuster, I got hit with a "rewind" fee. Thing is, it was on a DVD I rented and returned.

Took quite a few "associates" "supervisors" and a "manager" to cancel the charge.

I won't miss them... it's like missing Circuit City or Future Shop.... they had their time, now it's time to go.

My $.02

By Argon18 on 11/12/2013 3:58:46 PM , Rating: 2
I still have the Blockbuster card in my wallet. It's unfortunate they're closing. I had a store right next to my apartment building. I could pick up a DVD on the way home from work, and return it the next morning on my way in to work. (I walk to work BTW)

It was very convenient, much more so than Netflix, where you have to wait several days for the DVD to come in the mail.

By DiscoWade on 11/7/2013 6:28:11 PM , Rating: 2
I swore off Blockbuster forever when I was charged a late fee for being 1 minute late.

Good riddance to bad rubbish in my book.

By wordsworm on 11/7/2013 8:59:32 PM , Rating: 2
It looks as if online options are getting thinner as well. Netflix used to be a lot better.

Blockbuster sucked, but there were other video stores I liked in Montreal. I don't have any good ones here...

Anyways, I hope Netflix can get back their library.

RE: Nothing but contempt for video rental stores...
By Jaybus on 11/8/2013 1:51:56 PM , Rating: 2
The first thing to consider is that they have been beating a dead horse for a while with DVD rentals from a brick and mortar store. They could have been redbox, but chose not to be. They were in a position years ago to dominate the streaming media market. They had cash and had working relationships with the content providers that they could have morphed into a streaming media model. They could have beaten Netflix to the punch, but chose not to.

So their closing is mostly due to p-poor management. But there is another reason, and it is affecting Netflix and everybody else as well. The content providers will not release content for streaming. Most of Netflix content is STILL only available on rented DVD or BD. There are several reasons for this. They are afraid of piracy and that they won't get paid every single time it is viewed. They make more money on deals with Comcast, Cox, DirecTV, etc. who charge far more per viewing, so are afraid of Netflix deflating the ppv price. They are afraid Comcast, Cox, etc. will throttle competing media streamers like Netflix.

It's not Netflix fault. I'm sure they stream all the scraps from the table that Sony, WB, etc. will throw them.

By inperfectdarkness on 11/11/2013 5:54:45 PM , Rating: 2
This x100. The content owners refuse to get on board with the 21st century. Don't blame netflix. My solution is that I subscribe to netflix, and I don't care if I "miss out" on content--I just find something else.

Movies should either be worth seeing in the theater, or worth watching on netflix. If the companies won't play ball with netflix, I simply won't support their products.

Seriously, it's like the RIAA trying to push iTunes out of business by only allowing Apple to rent people CD's. That's how stupidly retarded these content owners are.

RE: Nothing but contempt for video rental stores...
By bah12 on 11/8/2013 2:22:43 PM , Rating: 2
It looks as if online options are getting thinner as well. Netflix used to be a lot better.
All by design.

Once the studios pull back from Netflix now that they aren't just a niche, and there aren't any more stores, Big Media will finally have the total control they've always wanted. Cable/Sat will finally repair the damage to their PPV services done by netflix. It won't be long before RedBox will start losing their contracts, mark my words. Then our options will be all PPV, just as they want.

The studios have always hated the rental model, they want us to buy a copy. Soon our options will be buy a copy, or buy PPV either through Sat/Cable (their favorite buds) or Online via iTunes/Play/Amazon.

By bah12 on 11/8/2013 2:25:15 PM , Rating: 2
Almost forgot, in reality they don't want us to buy a copy either. What they want is all PPV. They want us to pay each time we want to watch a movie. Sure you get 30 days, but if you get an itch for Ghostbusters 6 months from now they want cash again.

It drives them nuts that we can pay once and consume often, and share....pff that is heresy punishable by death.

By JediJeb on 11/8/2013 5:34:19 PM , Rating: 3
This is exactly what the movie companies want, and it is exactly why I have cut way back on my consumption of their products.

I may watch two movies a year in the theater and rent a couple DVDs when my nephew visits, otherwise I watch regular TV or Netflix, once those are gone I will probably just read.

I really like how the movie companies gripe that nobody goes to see their movies anymore. One, most of them are no good, and when they do have a good movie out it stays in a theater maybe three weeks then it is gone. That isn't enough time for me to get around to traveling to where I can see it.

I remember when I was a kid I watched Star Wars and the theater had it still playing on three screens and the billboard stated "Now in its 45th week!" Now that was when movies had staying power. Why can't they make something that can capture our attention like that again?

By kondor999 on 11/13/2013 11:20:55 AM , Rating: 2
I get everything from Piratebay or watch it in the theater if it got great reviews.

I love Netflix streaming but there's a lot missing (which is where good old PB comes into its own).

I'm just being 100% honest here. I don't enjoy doing this, and if I could pay $4 or so for a 720p version of the movie, I'd happily do so just to support the content makers. But I am not paying $15-25 for a disc that I'll watch 1-3 times at the most.

Plus, my wife would kill me, and then nobody wins...

By Reclaimer77 on 11/10/2013 9:42:30 AM , Rating: 2
Are you talking about their disc catalog? Because the online streaming is better than ever. Hell I would keep my subscription just to watch House of Cards.

Renting discs in 2013...I don't see the point.

By ven1ger on 11/7/2013 9:35:14 PM , Rating: 2
About 8+ years ago, when Blockbuster was offering their online service, they had the option of returning the online discs to the store and then getting free store rentals to tide you over til the discs in your online queue was delivered to you. I actually liked the feature even though I had both Netflix and Blockbuster subscriptions. Luckily, for me the Blockbuster was just a couple of shops away from the building I was working. Luckily, I made friends with the manager there and never had a problem.

About 2-3 years after I cancelled my Blockbuster membership because Netflix had a much better online experience, the Blockbuster website was really sad, Netflix was faster in delivery of discs, usually 1-2 days, Blockbuster was about 3-4 days. And even after awhile the movies available at the local shop were really limited selection after you go through most.

Oh well, always wondered when they were going to give up the ghost, years back.

By mars2k on 11/11/2013 12:40:21 PM , Rating: 2
How did Blockbuster fail? Let me count the ways….both of them
1. Arrogance
2. Stupidity
Arrogance made them think they could never be outdone
Stupidity made them not recognize it when it happened

By GlobleWarmingisbunk on 11/8/2013 12:50:05 AM , Rating: 3
Blockbuster was actually making money, until Carl Icahn got involved and went to war with CEO John Antioco. Mr. Antioco was the one who got rid of late fees and turned Blockbuster around. If it was not for Icahn Blockbuster would still be competing with Netflix. I recommend reading this article in the Harvard Business Review. [ eo-on-sparring-with-an-activist-shareholder/ar/1]

By superstition on 11/8/2013 1:51:23 AM , Rating: 2
Ichan destroy companies.

By Cypherdude1 on 11/8/2013 5:49:03 AM , Rating: 2
I recommend reading this article in the Harvard Business Review. [ eo-on-sparring-with-an-activist-shareholder/ar/1]
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By Camikazi on 11/8/2013 10:32:18 AM , Rating: 2

The link got broken in that other post.

sexist and silly Asian tech marketing photos
By superstition on 11/8/2013 6:47:01 PM , Rating: 2
It's hard to believe it's 2013.

I don't begrudge heterosexual men the enjoyment of looking at pretty ladies. However, it's really tacky at best and it is also sexist to drip them all over tech equipment as if no one wants to look at men (some people do) and as if they have anything to do with it in the first place.

If anything, the ladies just make the tech look humdrum. The images are really patronizing, as if men are going to look at a CD-ROM drive as if it's going to get him pretty girls.

By ProZach on 11/12/2013 3:02:03 AM , Rating: 2
quote: if men are going to look at a CD-ROM drive as if it's going to get him pretty girls.

To paraphrase Mr. Explosion: "It's a Blu-Ray drive, and you already know how I feel about that."

By drewsup on 11/7/2013 5:06:37 PM , Rating: 2
Nothing of value was lost...

By GotThumbs on 11/11/2013 3:28:22 PM , Rating: 2
It was long over due IMO. Red-box meets the needs of any person who does not steam video or use mail rental system. This also eliminates the need to pay low-skilled staff wages and dodges upcoming Obama-care mandate for large employers.

Financially, a smart and obvious move IMO.

sexist Asian tech marketing imagery
By superstition on 11/8/13, Rating: -1
By Camikazi on 11/8/2013 10:34:22 AM , Rating: 1
Sex sells and still the majority of people at those places are guys, if the majority were women then it would be scantily clad men. Half dressed men and women will ALWAYS be used since we are sexual creatures and it catches our attention and which one will be used depends on the majority of the userbase.

By Dorkyman on 11/8/2013 11:35:47 AM , Rating: 1
Wishing for an end to "sexism" in 2013 or any other year is like wishing the sun doesn't rise in the morning. BY DEFINITION it will never happen, and to wish otherwise is a waste of oxygen.

By gixser on 11/8/2013 5:56:14 PM , Rating: 1
Don't worry....that pic is from approx 6 years ago. Its all been fixed since then!

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