So, what happened? Blockbuster was founded by David Cook, a software supplier in the oil and gas industry. After studying the potential of a video-store business for a friend, he realized that a well-franchised chain could grow to 1, units.
And so the first Blockbuster store opened in Dallas on October 19, Andy Ash: According to David Cook, the opening night of that first Blockbuster store was a huge success. The story goes that they actually had to lock the doors because of overcrowding. The thing that really set Blockbuster apart at that time was their huge range of titles.
Other independent video stores could only keep track of or so movies. Blockbuster had an innovative new barcode system, which meant that they could track up to 10, VHSs per store to each registered customer, which also meant that they could keep an eye on those lucrative late fees.
Under Huizenga, Blockbuster embarked on an aggressive expansion plan, buying out existing video-rental chains while opening new stores at a rate of one per day. By , just three years after the first store opened, Blockbuster was America's No. But as Blockbuster became a multibillion-dollar company in the early '90s, adding music and video-game rental to its stores, Huizenga was worried about how emerging technology like cable television could hurt Blockbuster's video-store model.
In only two years under Viacom, Blockbuster lost half of its value. While Blockbuster and its new boss, John Antioco, focused on brick-and-mortar video stores, technological innovations meant that competition was on the rise.
In a deal that saw Enron do most of the work, a robust video-on-demand platform was successfully built and tested with customers. But it soon became clear to Enron that Blockbuster was so focused on its lucrative video stores that it had little time or commitment for the video-on-demand business.
As a result, in , Blockbuster walked away from the first major development of wide-scale movie streaming. After synthesizing analyses on its unraveling, I think these things most contributed to the failure:. Nicely summarized the battle between Blockbuster and Netflix Tyler! Based on the Blockbuster-Netflix saga and other similar happenings in different industries what do you think can the big players do or adopt as a strategy to keep themselves from becoming irrelevant since the new digital business model seems unlucrative to them in its infancy?
You must be logged in to post a comment. Skip to content. The HBS Digital Initiative brings together perspectives across disciplines to help people understand how technology is transforming organizations and the greater world. It was one of the biggest video rental retailers in the country.
It had branches from other countries as well. So what went so wrong? The fastest speed back then was less than 3kbps and the modem was a dial-up phone line. All your viewing and snacking needs were in one store. Blockbuster then was the biggest video rental company. It had 9, stores in total, with more than 4, of these in the US. It was so successful then, it was featured in numerous movies.
But in late , they filed a Chapter 11 for bankruptcy. So what happened to it? Blockbuster was obsessed with the new releases.
This is substantially pricier than the suggested retail price. Its main strategy was to open as many stores it could all over the country. That way it could gain a huge chunk of the market.
This strategy did work for a period of time, but it also incurred huge operating costs. More stores meant more rental spaces and more people to hire.
Also, it proved to be harder to keep track of revenues on each and every store. So Blockbuster introduced another plan, which was to acquire more new movie releases and regulate the old ones to the back of the store. That limited shelf space for the old titles; and the new titles were of limited supply. The mistake with this last business decision was that Blockbuster underestimated how much people wanted the old titles.
This lead to high levels of customer dissatisfaction.
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