Blockbuster LLC

David Cook opened the first Blockbuster Video store in Dallas, Texas on October 19, 1985. Cook had previously run a software company serving the oil industry. When oil prices collapsed, he pivoted to video rental — creating a store format that was cleaner, better organised, and had a wider selection than any existing rental outlet. The concept expanded to over 9,000 stores in 25 countries at its peak, becoming a defining cultural institution of the 1980s and 1990s.

Blockbuster's late fee revenue was approximately $800 million per year — roughly 16% of total revenue. The fees were deeply resented by customers. Reed Hastings, who would later found Netflix, claimed his anger at a $40 Blockbuster late fee was the inspiration for Netflix's subscription model. Blockbuster's CEO later admitted that late fees were "consumer-unfriendly" but essential to profitability. Eliminating them proved financially devastating when Blockbuster finally tried.

In 2000, Netflix co-founders Reed Hastings and Marc Randolph flew to Dallas to meet with Blockbuster CEO John Antioco. They proposed that Netflix run Blockbuster's online operation in exchange for Blockbuster promoting Netflix in its stores. The asking price was $50 million. Antioco laughed them out of the room, reportedly calling the idea "a very small niche business." Hastings has said the laughter was embarrassing. Netflix was worth $13 billion when Blockbuster filed for bankruptcy.

Blockbuster hired a new CEO, John Antioco, who actually understood the Netflix threat. Antioco eliminated late fees — losing $400 million in annual revenue — and launched Blockbuster Online to compete with Netflix. The strategy was working. Then Blockbuster's largest shareholder, Carl Icahn, forced Antioco out over a compensation dispute and reversed the online strategy. The late fees came back. Customers left permanently.

Blockbuster filed for bankruptcy in September 2010 with $930 million in debt. The 9,000 store chain was reduced to a single location — in Bend, Oregon — which became a tourist attraction. The last Blockbuster on Earth hosts slumber parties, rents Blockbuster-branded merchandise, and operates as a cultural monument to the dangers of ignoring technological change. It has an Airbnb listing.