It wasn’t too long ago that Blockbuster Video was on top of the home video world. More than 9000 stores dotted the U.S. in 2004, each offering some 6000 square feet of DVDs, VHS tapes, video games, and candy bars. But the arrival of Netflix and entertainment-on-demand stripped the company to the bone and necessitated bankruptcy: As of January 2014, just 51 Blockbuster franchises were left. If you’re feeling nostalgic for a time when it required transportation and human interaction to watch a movie, check out these 15 facts about the rise and fall of America’s onetime video king.
1. THE FIRST STORE OPENED BECAUSE OF FALLING OIL PRICES.
Dallas, Texas entrepreneur David Cook was still smarting from a collapsed oil market in 1985 when his wife, Sandy, broached the idea of opening up a video store. Cook had been writing computer programs to manage inventory for big oil businesses, but a market collapse led to a stack of unpaid invoices. At the same time, the VHS rental market was exploding, growing from 7000 stores in 1983 to 19,000 in 1986. The Cooks decided the industry could use a mega-store with an inventory larger than independent shops could provide. Sandy came up with the familiar blue-and-yellow color scheme, and Blockbuster was born.
2. THEY WERE THE FIRST TO KEEP TAPES ON SHELVES.
Rental stores of the 1980s had a problem: Patrons who enjoyed movies but didn’t enjoy paying for them had a habit of relieving owners of their inventory. To discourage theft, an empty VHS box would sit on the shelf and an exchange would be made at the counter. But because Blockbuster’s inventory was so vast—the Cooks began with 8000 to 10,000 titles—it would be impossible to have a back room for the movies. The tapes stayed on shelves, allowing customers to see what was in stock. The system allowed for quicker customer turnover and an efficient inventory system that could allow them to populate an entire store with stock in a single day. By 1988, the franchise had more than 400 locations.
3. THEY ABSTAINED FROM PORN.
Unlike many mom-and-pop shops that had a neon sign and a set of swinging doors that led to an adult selection of titles, the Cooks decided early on that Blockbuster would be a genital-free zone. It wasn’t a moral issue for them: “We don’t care if people watch pornography,” Cook told Business Week. “We just don’t want to sell it to you. A lot of families came to our store only—not because of the selection and not because of the long hours and not because of the convenient check-out and the three-day rentals—they came because they didn't mind their kids running around the store because they wouldn't see any garbage.”
4. THEY WERE SUED BY NINTENDO.
It was inevitable that Blockbuster and other video chains would capitalize on the resurgence of video games in the 1980s by renting out popular titles. Mario and Link, however, were not willing to cooperate: Sticking to its reputation for stern business, Nintendo sued the company in 1989 for copyright infringement, complaining that stores were photocopying game manuals. (Blockbuster said they were simply compensating for the worn-out originals.) The two wound up settling out of court. By 1994, Nintendo had capitulated on its anti-rental stance, and Blockbuster reported that game rentals made up 8 to 10 percent of their revenue.
5. THEY MADE A FORTUNE ON LATE FEES.
It’s difficult to lose money gambling on the over-booked, overworked American consumer, and Blockbuster was no exception. The company profited enormously from late fees, which accrued after the one- or three-day rental term had expired. In 2000, $800 million, or 16 percent of total revenue, came from fines. After the company revamped its policies in 2004 to trumpet “no more late fees,” New Jersey state attorney generals cried foul: While that may have been technically correct, a movie or game more than eight days late meant the customer was charged the full purchase price. Though Blockbuster's policy was to reverse the charges within 30 days if the customer returned the item, they were still charged a restocking fee.
6. THEY TRIED BECOMING A MINI-AMUSEMENT PARK.
Though he eventually turned the company over to other investors, Cook anticipated the idea that Blockbuster could become more than just a rental outfit when he named the company Blockbuster Entertainment in 1985. In 1994, executives tried to make good on the label by opening a center dubbed the Blockbuster Block Party in Albuquerque, New Mexico. Spread over 60,000 square feet, the “adult amusement park” featured laser tag, mazes, and motion simulator rides. The press referred to it as a “miniature Disneyland on steroids,” but the concept never caught on.
7. ITS MUSIC STORES BANNED MALE EMPLOYEES FROM HAVING LONG HAIR.
Starting in 1994, male employees working for the Blockbuster Music spin-off stores were told that long hair and earrings were banned. (According to Billboard magazine, their hair could be "no more than 2 inches past their collars.") A number of workers who refused to comply and were terminated wound up suing; the case was lost on appeal in 1998.
8. THEY GOT EXCLUSIVE RIGHTS TO SOME MOVIES.
In the 1990s, some titles, like Lolita (1997), were exclusive to the chain, leaving smaller shops unable to secure them for their own inventory and prompting some to buy from wholesalers who ignored the exclusivity rules.
9. THEY ADVERTISED ON DRY CLEANING HANGERS.
Sensing a missed opportunity to capture the attention of dry-cleaning customers, Blockbuster and several other businesses placed advertisements on bags and clothes hangers in 1998. Coupons were also stapled to the supplies.
10. THEY TURNED DOWN NETFLIX ...
Netflix was just beginning its ascension into a DVD-by-mail and streaming giant when CEO Reed Hastings met with Blockbuster in 2000 to pitch the possibility of his company handling Blockbuster’s online efforts. At the time, Blockbuster couldn’t conceive of how Hastings could add any value to their enormously successful enterprise; according to Forbes, Hastings was “laughed out of the room.”
11. … AND LATER MAILED THEM A KITCHEN SINK.
After feeling the pressure from both Netflix and Redbox rental kiosks, Blockbuster developed its own mail rental service in 2004. According to Fast Company, when Hastings told listeners on a conference call that the company had “thrown everything but the kitchen sink” at Netflix in an attempt to be competitive, he received a kitchen sink in the mail from Blockbuster the following day.
12. THEY TRIED TO BUY CIRCUIT CITY.
With Circuit City ailing, Blockbuster tried to arrange a buyout worth $1 billion in 2008—but the electronics franchise went bankrupt the following year. Blockbuster wound up losing a billion all by itself in 2010, forcing it into bankruptcy.
13. THEIR VACANT STORES WERE IN HIGH DEMAND.
When Blockbuster began to vacate their locations, there was some small consolation: the storefronts were in high demand by strip mall occupants. A pawn shop franchise bought several locations in Florida and Puerto Rico; cell phone stores took up other locations. Business owners attributed their appeal to being in prime foot-traffic spots.
14. YOU CAN STILL VISIT BLOCKBUSTER ... IN ALASKA.
The dissolution of Blockbuster’s stores has left only a small number of the familiar torn-ticket awnings still operating: the owners that license the Blockbuster name for its brand recognition. Found mainly in rural areas, the company also has a footprint in Alaska, where several stores see a steady stream of traffic coming in during the weekends. New movies can be rented for $5, while catalog titles are as low as 49 cents a day. The most popular titles, though, are DVDs of premium cable shows: broadband service is expensive in Alaska, and binging doesn’t come cheaply.
15. SOMEONE NOTICED THE TITLE OF THE LAST MOVIE RENTED THERE.
Aside from the independently-owned, in-name-only stores, the last official Blockbuster Video location closed in November 2013. The last title rented? Seth Rogen’s 2013 apocalyptic comedy This Is the End. The company posted a photo of the moment on its Twitter page. And yes, the customer still had to return it.