It’s a commonly known “fact” that Netflix killed Blockbuster Video, because shortly after Netflix came on the scene, Blockbuster had some serious business troubles and finally went bankrupt and out of business.
Netflix had little, if anything, to do with it. Terrible management filled with greed killed Blockbuster.
When movie studios started selling VHS tapes of their movies, they were ridiculously expensive; ninety dollars and up for a movie. Nobody but people who rented out movies (and maybe some rich film buffs) bought them.
It cost about five bucks for a movie ticket then, so renting a movie for five bucks for the family to watch was like getting the whole family on one ticket. It was a good bargain for everyone; the studios, the rental stores, and the renters.
The first nail in Blockbuster’s coffin was the price of the tapes dropping. Blockbuster was far from the only tape rental store. There were scores of others, but they were the largest. When the price of tapes started dropping, Blockbuster’s competition’s prices dropped, as well. Blockbuster didn’t.
They had done so well because they were so big, and could have a bigger selection of movies, so they survived. I only rented a few movies from them. None were close in Orlando, and when we moved back to Illinois the closest rental to our house was a Family Video. And their movies were two bucks for four nights, Blockbuster was still five bucks for two nights. And we were poor, not renting any movies and almost never going to them, unless it was to a Disney movie with the kids.
Movie prices kept going down, and a lot of smaller outlets could no longer make a profit. Then came DVDs.
The smaller outlets had little trouble adapting to the new media, but the massive behemoth Blockbuster was late to the party. It takes a lot more time to turn a freighter around than it does a fishing boat. They suffered more. They closed several stores here. Meanwhile, Family Video was expanding. At one point there was a Family Video across south 6th Street from Blockbuster.
DVDs were initially expensive, but not nearly as much as tapes were when they first came out. It wasn’t long before Redbox automated the whole DVD rental thing, with a vending machine that produced DVDs, the dollar rental paid by credit or debit card. They made money on excessive late fees, as if you returned it the next day the credit card company made more from Redbox than your dollar. Their pull was convenience, vending machines placed in high traffic areas like a drug store or fast food joint. They prospered, and still do.
Then, suddenly it seemed to me, who had been on the internet for nearly a decade, that everyone was on the internet.
By then Blockbuster was tottering, already shedding stores left and right. They had priced themselves out of business, charging the same five bucks they had charged two decades earlier when movies were a hundred bucks to buy, and now you could get a DVD from a Walmart bargain bin for what Blockbuster wanted for two nights!
Netflix was brand new and renting a month’s worth of mail order DVDs over the internet for the price of two Blockbuster rentals when the last Blockbuster in Springfield closed.
It was the one across the street from Family Video. That store, and many other Family Video stores all over town are still in business, as well as lots of Redbox machines, are still thriving.
Netflix didn’t kill Blockbuster. Blockbuster committed suicide.