Blockbuster Busts

Remember 1994? “Forrest Gump” and the “The Lion King” and were raking in the big bucks at the box office, VHS tapes were state-of-the-art digital entertainment, the Mosaic browser was making the World Wide Web comprehensible to the (elite) masses, and Viacom thought enough of the Blockbuster bricks-and-mortar video-rental business, which had started with a single store in Dallas nine years previously, to shell out $8.4 billion — mostly in stock — for it. 

Dish Networks, which acquired the company for $320 million at a bankruptcy auction in 2011, announced yesterday that it would shutter the remaining 300 or so stores it owns outright and end its DVD by mail business, too, by January. Some independently owned franchises will keep the once seemingly ubiquitous logo in the public eye in about 50 locations in the U.S. and a few places overseas.



“The closures, which Dish said will cost the jobs of about 2,800 employees, signal the end of an era in the entertainment industry, the latest example of how brick-and-mortar chains are being displaced by digital competitors,” Martin Peers and Shalini Ramachandran write in the Wall Street Journal.

The company had “more than 9,000 retail stores across America just nine years ago,” Brian Stelter reports in the New York Times, and about 1,700 when Dish took over, although it quickly shut a slew of them. The announcement was “bittersweet but long-expected,” he observes. 

Wikipedia neatly traces the ownership trail over the years.

“If only Blockbuster could rewind back to the 1990s,” writes CNN’s Ted Leopold, when signs in video stores urged customers to “Be kind, please rewind.” Back then, Leopold muses, “visiting the store was a weekly rite for many people, who would show up on Friday evenings to check out the latest releases, navigating a crush of couples and families who had exactly the same idea."

In fact, it “was once so dominant in the home-video market that it was sued by independent video retailers, which claimed in 2001 that the company’s revenue-sharing agreements with movie studios hurt competition,” Bloomberg’s Alex Barinka reminds us. “The lawsuit was later dismissed.”

“It was the McDonald’s of video rental chains. The company that squashed countless local mom-and-pop video stores,” Entertainment Weekly’s James Hibberd writes in the lede of a piece carrying the hed “Blockbuster Video: 10 Things We Won’t Miss.” They include such 20th Century nuisances as the wrong movie in the box and late fees. Hibberd also embeds a classic Blockbuster training video from the ’90s in his story.

1994 was also the year “Dumb and Dumber” was released, reminding us that all is not as simple as it seems to be. And the first DVD player — a collaboration between Tatung and Pacific Digital — was manufactured, according to Wikipedia, although the first DVD movies were not released until 1996. DVD rentals surpassed VHS tapes in 2003. Netflix launched online streaming in 2007. And now this.

“Blockbuster has no brand,” analyst Dan Rayburn tellsUSA Today’s Roger Yu. “Consumers stopped thinking about the brand a long time ago. Why did they take so long to close?”

That said, Dish president and CEO Joseph P. Clayton averred that  the company isn’t giving up on the braggadocio inherent in the name. 

“Despite our closing of the physical distribution elements of the business, we continue to see value in the Blockbuster brand, and we expect to leverage that brand as we continue to expand our digital offerings,” he said yesterday in a release announcing the news. Stayed tuned for developments, as television network broadcasters — you remember them, right? — used to say?

“It's an interesting footnote to business history. [Dish] thought [Blockbuster] had a longer tail than it did.” Wunderlich Securities analyst Matthew Harrigan tells Yu. “But digital distribution happened faster than people may have thought.” 

“There is a history of Blockbuster being eclipsed regularly by technology and its holding on inordinately to the preservation of its brick-and-mortar business while the world was moving exponentially toward new models of digital distribution,” Warren Lieberfarb, a former president of Warner Bros' home-video business, tells the WSJ’s Peers and Ramachandran.

Well, as Forrest Gump said his mama always said, “You've got to put the past behind you before you can move on.” She also said “dying was a part of life.” 

But unlike “The Lion King,” the Blockbuster saga does not end with a roar and a rousing song. There might, or might not, be a lesson in there for certain king-of-the-jungle digital enterprises in 2013.

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