The Rise and Fall of Blockbuster

Today I was reading an article that indicated that Blockbuster was in the process of filing chapter 11 bankruptcy, which got me thinking about the how much media delivery has changed in my lifetime and is still changing. When I was growing up in the 60’s if you wanted to see a movie, you had to go to a theater. If you missed it at the theater, it might be years before it would appear in edited form on the TV. If for some reason you were away at the time it was on and missed it, too bad it might be another year or so before they appeared again. The advantage in this of course is that movies such as Wizard of Oz were a once a year special event, the disadvantage was that it was a once a year event and easy to miss it.

When VHS tapes started selling, it was such a big change. Now you could purchase a movie to watch anytime you wanted to However VHS tapes were fairly expensive and fragile, if played over and over again, they would wear out and break easily. Storing them was a hassle, since they took up a lot of space. Plus, there were a lot of movies you may want to see once, but had no reason to keep them. This is the time when the video rental places like Blockbuster began to prosper, it allowed the consumer to rent a movie at anytime. Unfortunately it wasn’t always the movie the consumer actually wanted to see. The movies that were available to the average consumer was limited by the size and choices of their local video store.

When the DVD came along it did solve a couple of the problems that consumers had with VHS tapes, it was easier to store, it lasted longer. DVDs if properly cared for do last much longer the VHS tapes, but lets face most of us have a few scratch disk just to remind us how fragile and expensive they were Which meant that the local brick and mortar video store like Blockbuster still seem to make sense business wise. Then in 1997 Netflix came into being and turned the video rental world upside down. Marc Randolph and Reed Hasting the founders of Netflix realized that DVDs could be easily and cheaply shipped by mail. What DVDs were available was no longer limited by the size of the local video store. As longer as the movie was available for distribution, then any Netflix member could have a DVD within 3 business days. Plus early in its existence Netflix got rid of late fees, something that consumers hated about Blockbuster. Still you had to wait 3 days to get a new video from Netflix, while a video from Blockbuster was available at anytime as long as the store was open. This meant that for most consumers especially those with children Blockbuster was still the first option. It was however an option that had reached its peak and was on the decline. Blockbuster, unfortunately thought that DVDs by mail was the future, when in reality that method had already started on its downward trend,by the time they embraced it.

What Blockbuster never saw coming, was the effect high speed broadband and the integration of the computer and the TV would have on the industry. High speed broadband means that both streaming and downloading movies over the Internet are now not only possible, but also practical. Also companies like Apple, TiVo, Roku and Microsoft are now offering easy ways for consumers to view downloaded or streaming video on their TV’s. Netflix caught on to this almost immediately and started offering the ability to stream a movie to your computer or set top box along with renting a physical copy. Adding to the pressure against Blockbuster were companies like Apple and Amazon which offer the ability to download movies for viewing at anytime. The final nail in Blockbuster coffin was the explosive popularity of the smartphone market starting with the Iphone and faster more reliable mobile networking. This meant that people could watch a streaming or downloaded video in the palm of their hands at a touch of a button. Blockbuster was clearly unable to change with the times and bankruptcy is the result.



  1. Nick says

    This article is poorly written. I also think you missed a huge point about Blockbuster’s demise, in the fact that they had the opportunity to buy Netflix for pennies and missed out.