Blockbuster vs Walt Disney

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.

Walt Disney was fired from his job at the Kansas City Star newspaper in 1919 because his editor felt he "lacked imagination and had no good ideas." He subsequently started Laugh-O-Gram Studios in Kansas City — which went bankrupt. In 1923, he moved to Hollywood with $40 in his pocket and founded the Disney Brothers Cartoon Studio with his brother Roy. His first successful character, Oswald the Lucky Rabbit, was created in 1927 — and promptly stolen by his distributor, who owned the rights.

Having lost Oswald, Disney created a replacement character on the train back to California from New York. He originally named the mouse Mortimer; his wife Lillian suggested Mickey. Steamboat Willie, released in November 1928, was the first cartoon with synchronised sound. The film was a sensation. Mickey Mouse became the most recognisable fictional character in history. Disney later said: "I only hope that we never lose sight of one thing — that it was all started by a mouse."

Snow White and the Seven Dwarfs, released in December 1937, was the world's first feature-length animated film. The Hollywood establishment called it "Disney's Folly" — certain that audiences would not watch an 83-minute animated movie. The film cost $1.4 million — Disney had to mortgage his house to help finance it. Snow White grossed $8 million in its initial release, saving the studio from bankruptcy and establishing animation as a legitimate art form.

Disney acquired Marvel Entertainment for $4 billion in 2009 and Lucasfilm — the Star Wars franchise — for $4.05 billion in 2012. The acquisitions gave Disney ownership of two of the most valuable entertainment franchises in history. The Marvel Cinematic Universe became the highest-grossing film franchise of all time, generating over $30 billion in box office revenue. The company that Walt Disney had started with $40 and a mouse drawing on a train had become the most powerful entertainment company in human history.

Disney's direct-to-consumer streaming division — Disney+, Hulu, and ESPN+ — had lost more than $11 billion since Disney+ launched in November 2019. CEO Bob Iger, who returned to the role in November 2022, promised the division would reach profitability by end of fiscal 2024. It did: entertainment streaming posted its first profit in Q2 FY2024. Disney reported $91.4 billion in total revenue for fiscal year 2024, with streaming targeting $1 billion in operating income for fiscal 2025. Q1 FY2025 revenue was $24.7 billion — up 5% — with Disney+ gaining 1.4 million subscribers. The business Walt Disney had built on a mouse and a motion picture company had spent more than a decade and $11 billion learning that streaming was harder than it looked.