On October 19th 1985, the first Blockbuster video store opens in Texas.
Blockbuster, a childhood staple for millenials, revolutionized the video rentals industry of its time. Blockbuster’s unique business model allowed it to offer lower prices and greater selection of movies, games, and tv shows to consumers than its competitors. By obtaining contracts with studios to give Blockbuster early releases of new and popular movies, it was able to expand quickly. Independent VHS rental stores quickly went out of business and were replaced by shiny new Blockbusters.
This replacement of old businesses with more efficient newer companies is referred to as creative destruction, and it is the essence of the competitive process. Although it is sometimes sad to see a store close, consumers usually benefit. The same competitive process that allowed Blockbuster to rise is also responsible for its demise. According to Blockbuster’s CEO, Netflix, now worth billions, was not even on Blockbuster’s radar when it started out as a mail-order movie business. Although Blockbuster engaged in a billion dollar campaign to keep attracting customers to their stores, the rise of more convenient on-demand services led the company to eventually file for bankruptcy in 2010.
- What other companies from your childhood have been replaced by online retailers?
- As the popularity of online retailers raise, do you think that there is still demand for brick and mortar stores?
- How has the availability of on-demand video changed the way you view video content?
2, Oct. 2018, Blockbuster Store [Digital photograph]. Retrieved from <google.com>.