Blockbuster LLC, formerly Blockbuster Entertainment, Inc., and also known as Blockbuster Video or simply Blockbuster, is an American-based provider of home movie and video game rental services through a video rental shop, DVD-by-mail, streaming, video on demand, and cinema theater. Blockbuster expanded internationally throughout the 1990s. At its peak in 2004, Blockbuster employed 84,300 people worldwide, including about 58,500 in the United States and about 25,800 in other countries, and had 9,094 stores in total, with more than 4,500 of these in the US. Competition from the Netflix mail-order service, Redbox automated kiosks, and video on demand services were major factors in Blockbuster's eventual demise. Blockbuster began to lose significant revenue during the 2000s, and in 2010, the company filed for bankruptcy protection. The following year, its remaining 1,700 stores were bought by satellite television provider Dish Network. In November 2013, the last 300 company-owned stores were closed. While the Blockbuster brand has been mostly retired, Dish maintained a small number of Blockbuster franchise agreements, which allowed some stores to remain open. By April 2019, just one store remained open—in Bend, Oregon.
1985–1997: David Cook era
Blockbuster's early beginnings can be traced back to another company, Cook Data Services, that was founded by David Cook in 1978. The company's primary goal was to supply software services to the oil and gas industries throughout Texas, but it was not very successful. Sandy Cook, David's wife, wanted to get into the video business, and her husband would soon study the industry and future prospects. Using profit he made from the sale of David P. Cook & Associates, the subsidiary of his company, he decided to buy into a video store franchise in Dallas known as Video Works. When Video Works would not allow him to decorate the interior of his store with a blue-and-yellow design, he departed the franchise and opened the first Blockbuster Video in 1985 under his own company Blockbuster Video Inc. When he realized the potential in video rentals, Cook abandoned the oil industry and began franchising the Blockbuster store. The first Blockbuster store opened October 19, 1985, in Dallas, Texas, with an inventory of 8,000 VHS and 2,000 Beta tapes. Cook's experience with managing huge databases proved helpful in driving innovation within the industry. Following early success from the company's first stores, Cook built a $6-million warehouse in Garland, Texas, to help sustain and support future growth that allowed new stores to open quickly. Blockbuster would often custom-tailor a store's inventory to its neighborhood, based on local demographics. In 1987, the company won a court case against Nintendo, which paved the way for video game rental. Also that year, Waste Management co-founder Wayne Huizenga, who originally had reservations about entering the video rental industry, agreed to acquire several Blockbuster stores. At that point the number of stores counted 19, and attracted Huizenga's associate John Melk's attention due to its efficiency, family-friendly image and business model, and convinced Huizenga to have a look at it. Huizenga and Melk utilized techniques from their waste business and Ray Kroc's model of expansion to rapidly expand Blockbuster, and soon they were opening a new store every 24 hours. They took over many of the existing Blockbuster franchise stores as well, and Huizenga even spent much of the late 1980s acquiring several of Blockbuster's rivals, including Major Video.
In 1990, Blockbuster bought mid-Atlantic rival Erol's which had more than 250 stores. In 1992, Blockbuster acquired the Sound Warehouse and Music Plus music retail chains and created Blockbuster Music. In October 1993, Blockbuster took controlling interest in Spelling Entertainment Group, a media company run by television producer Aaron Spelling. Blockbuster purchased Super Club Retail Entertainment Corp. on November 22, 1993 from Philips Electronics, N.V. for 5.2 million shares of Blockbuster stock. This brought approximately 270 Record Bar, Tracks, Turtles and Rhythm and Views music stores and approximately 160 video retail superstores into the corporation. It also owned 35% of Republic Pictures; that company merged with Spelling in April 1994.
Blockbuster became a multibillion-dollar company, but Huizenga was worried about how new technology could threaten their business, such as video on demand and the growth of cable television. In 1991, just three days after Time Warner had announced they would upgrade their cable system, Blockbuster's shares dropped more than 10 percent. In 1993, he made an attempt to expand into other areas by investing in Viacom. Huizenga also considered buying a cable company, but this was unknown territory for Blockbuster and he decided not to take the risk. He also had the idea of a 2,500-acre Blockbuster sports and amusement park in Florida, something Blockbuster was still considering as late as August 1994. Unable to come up with a proper solution about how to face the growing threats to the traditional video store, he made the decision to sell Blockbuster to Viacom and pull out. Viacom acquired Blockbuster in 1994 for $8.4 billion to help finance its bid for Paramount in the bidding war with QVC Network Inc. Blockbuster's stock trade had been dropping steadily the months before the merger, with a small rise after the deal was announced, and three years later, in 1997, it's worth was estimated to just $4.6 billion.
The Blockbuster Block Party concept was test-marketed in Albuquerque, New Mexico, and Indianapolis, Indiana, in 1994. It was an "entertainment complex" aimed at adults, containing eight themed areas housing a restaurant, games, laser tag arena, and motion simulator rides, and was housed in a windowless building the size of a city block. During the 1990s, Blockbuster expanded in the United Kingdom, purchasing that country's Ritz Video chain. The stores were rebranded to Blockbuster, making it the number one UK rental chain.
The original Blockbuster company, Blockbuster Video Inc., was merged into the parent company Blockbuster Entertainment Inc. which replaced the Blockbuster Entertainment Company earlier. In 1996, Blockbuster Entertainment Inc. merged into a new Blockbuster Entertainment Corporation and the retail stores, then called Blockbuster Video, were renamed Blockbuster. The logo changed slightly, but retained the ITC Machine font. In November 1996 Blockbuster confirmed that it was moving its headquarters from Fort Lauderdale, Florida to the Renaissance Tower in downtown Dallas. Most of the workers at the Florida headquarters did not want to relocate, so Blockbuster planned to hire around 500 to 600 new employees for its Dallas headquarters. The company had offered various relocation packages to all of its Fort Lauderdale staff. The second Blockbuster Entertainment Corporation was later merged into Blockbuster, Inc.