The Blockbuster Inc. Story

Blockbuster, Inc. is the company that oversees the Blockbuster Video and Blockbuster Online rental service stores. It is a global brand as it operates in more than 20 countries, but most of its operations are based in the United States. Their stores are everywhere. You can find one almost anywhere in the United States due to the large number of franchises and the large number of corporate stores. Blockbuster operated more than 7,000 stores as of January 2009 and reported $ 5.29 billion in revenue for fiscal year 2008.


David and Sandy CooK started the company, now known as Blockbuster Inc., in 1982, just as the video began to make its way into American homes. It was originally known as “Cook Data Services”. David, a former software engineer, at the time had revolutionary ideas on how to make a rental business more profitable and efficient. In 1985, the first Blockbuster Video store was opened in Dallas, Texas, to serve as a competitor to local video stores in many parts of the country.


The Blockbuster store had a larger selection, 8,000 tapes, than the rest of these family-owned video stores. It also had a computerized inventory and the tapes were simply organized on the shelves, making the selection process much faster. Other video stores required customers to sign the contract individually first, and then the employee had to go find the tape. The Blockbuster model also allowed customers to have the movies for three nights instead of one, and made the stores family-friendly by denying adult movies and keeping them open until midnight every night of the week, even on Sundays.


The Cooks model was so successful that they had more than three stores open in 1986. It was then that they decided to rename their company to Blockbuster Entertainment Corporation. The Cooks left the company in 1987, putting investor Wayne Huizenga in command. He was in favor of aggressive expansion, which led to the opening of 15 corporate stores and 20 franchises by June 1987 and 133 stores later that year. The company opened six regional offices in its effort to operate from coast to coast.


A Blockbuster move that led to a backlash was its practice of buying from local video networks. These networks included Major Video, Inc. of Oklahoma Entertainment, Inc .; Vector Videos Inc., and several others. In the early 1990s, industry experts began to wonder if the chain had not begun to saturate the market. In response, he turned to overseas operations, opening in the UK. It currently has major operations in Europe, South America, Australia, and Japan.

The fall

In the late 1990s and early 2000s, Blockbuster began to get some real competition in the growing online rental market when DVDs began to replace tapes. Its main competitor was Netflix, released in 1999. DVDs were expensive to transport and not as fragile as tapes, and they were much less expensive to buy than to rent. Fewer people went to stores, as they could rent movies at home via the Internet. Although the company went public in 1999, significant losses began to be reported.

The changes

In 2004 the company launched its own online rental service, Blockbuster Online, to try to regain some of its market share. The late night fee collection system was replaced by a new model that will allow customers to purchase their rented DVDs after a certain period of time.