Blockbuster

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, has claimed his anger at a $40 Blockbuster late fee inspired Netflix's subscription model (he has since admitted the story was partly invented for marketing). Blockbuster's CEO later acknowledged 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." Netflix was worth $13 billion when Blockbuster filed for bankruptcy. By 2026, Netflix had 325 million subscribers and $45 billion in annual revenue.

Blockbuster's then-CEO John Antioco understood the Netflix threat better than anyone in the company. He eliminated late fees — sacrificing $400 million in annual revenue — and launched Blockbuster Online to compete with Netflix. The strategy was beginning to work. Then Carl Icahn, Blockbuster's largest shareholder, forced Antioco out over a compensation dispute and reversed the online strategy. The late fees came back. Customers left permanently and never returned.

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 has become a tourist attraction and cultural monument to the dangers of ignoring technological change. The last Blockbuster on Earth hosts slumber parties, sells merchandise, operates an Airbnb listing, and has been the subject of documentaries and pilgrimages. Its existence as a living museum to corporate failure is arguably more valuable than anything Blockbuster accomplished in its prime.