Why Blockbuster Failed (Hint: It Wasn't Because of Netflix)
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- Опубліковано 19 бер 2024
- Blockbuster went from being a nationwide, household name and making $6 billion annually, to collapsing in just a few short years and reduced to only having one storefront left. But what killed Blockbuster...is not what you might expect.
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I used to work at Blockbuster. It sucked working there because they had this system where you had to sell combo bundles of candy / popcorn /drinks to keep your job. So basically 2 drinks, 2 boxes of candy and a popcorn is one combo. If someone got 1 box of candy and you tried to up sell them to 2 boxes of candy for $3, that too counted. But a lot of the time people just want what they want, and don't realize that your job was literally on the line if you didn't meet your numbers. Was a very frustrating thing. I quit in the end because I hated that part of the job.
I use to be a store manager at blockbuster. They couldn't actually fire you over it. Sorry, they lied to you about that. Corporate just wanted us to threaten the employees with that to get them to sell more candy since the candy was the 2nd highest profit margin item in the store, batteries being the highest but no one would buy batteries. I didn't do that to my employees, I just told them that candy was the 2nd highest profit margin item and that they should suggest something. And if the customer said no, to not push it further. In the region our store had the highest revenue. I however would also just buy a bag of popcorn per shift, burn it in microwave we had, bring it to the front, and let the smell alone cause every customer to buy popcorn. Our store had the highest popcorn sells in the state.
I worked at FYE in highschool, it was a very similar system.
I would have been the easiest sale if I rented there. I could have singlehandedly kept your numbers up.😂
@@YelrocVideos When I worked for them, I was told that all hours were based on the number of items that we were able to move through the store. It wasn't us individually, but as the whole store. This is why running promos that gave a third rental free if you got two off the wall (still considered new releases) would help with hours for the store so much. I was never management, so I don't know any behind the scenes stuff. This would have been 2001-2003 roughly.
@@damonf6564 Yes, if enough things were rented/sold then that would add to the number of extra hours the store had. Thus allowing for more employees to be in the store. Minimum number was two people for safety reasons. Most stores used those extra hours for Friday/Saturday Night the normally busiest times. Corporate started getting really stingy with the extra hours around 2004-2005.
The best part of Blockbuster was going there on a Friday night and browsing the shelves. It was like treasure hunting. Once BB started requiring you to bring the movies back on Sunday night or pay double, it felt more like a snooty library.
Blockbuster's rampant policies were what killed it. In the 1990s, why would anyone pay $3.25 to keep a movie for a measly 2 days? That's not enough time. In my city, mom and pop stores KILLED them by simply copying their methods BUT it was FIVE nights for $1.99. Blockbuster stone cold refused to acknowledge this was a threat and look where it left them. I know for a fact that my state wasn't the only one that had rivals copying and undercutting them. Remember Hollywood Video? They offered a 2-for-1 FIVE night rental deal that was still cheaper. That's why Blockbuster went under. Their stubbornness and steep prices ensured they couldn't survive.
@@largol33t12 And where is Hollywood Video nowadays?
The whole late fees scheme was what did it for me, put very simply netflix didn't charge late fees while blockbuster did. I could watch the movies whenever, and send them back when I had the time, instead of having to make sure that I watched the movie and got it back within a couple days...
In 2009 I was a store manager at a blockbuster. On the weekly conference calls for the region, the concern was not Netflix, it was instead Red Box. I demoted myself from store manager to focus more on college and eventually promoted myself to customer.
Boy do i remember the video game rentals well. It was a great way to find out if a game sucked without having to buy it 😂
those days need to come back.
@@jeanp.5929Redbox still rents games
Me too. I didn't even live in the US (I was raised in Venezuela) but in my city there were a few Blockbusters and the first PS2 games I played were rented from them.
It's crazy how an empire as big as that fell so hard (and very quickly) due to its inability to adapt to the changes in the industry.
...so in other words, it WAS because of Netflix.
Lol yea
More like Blockbuster screwing up and Netflix taking advantage of it.
Be kind. Rewind.
I still remember the first video store we had a membership with, pre Blockbuster, cost $100/yr. BB destroyed that business model. Not to mention the choice was comparatively unending. Who else remembers spending an hour or so in BB just trying to decide what to watch?
So many times- and if you were there with friends it was harder than agreeing what kind of pizza to order!
@@agogecoach8790 Or significant other
BB shutting down mom and pop vid stores, expensive rental fees, rewind fees, ridiculously high late fees they gleefully enforced….people were more than happy to send a FU to blockbuster by going Redbox and Netflix
I became a Netflix customer as soon as I found out about the company. Why would I drive to Blockbuster to rent a movie that had to be returned on a certain day or else be charged a late fee when I could go online and have movies mailed to me that I could keep until I was done with them, so there were never any late fees. Once the movies were returned Netflix would mail me the next movies in my queue. Unfortunately, Netflix has embraced the same kind of arrogant practices that were the downfall of Blockbuster. I canceled Netflix 5 years ago and haven't missed it.
Blockbuster could make a huge comeback with the growing rise in demand for physical media.
Offer all of the in-demand movies in the highest quality media possible, and that way people are only paying for what they want when they want
Redbox DVD vending machines at $1/day put them out of business.
Redbox didn't come along until AFTER Blockbuster was essentially out of business.
This, this is what killed Blockbuster. I was a store manager for a while and Red Box was the primary topic of discussion on the weekly conference calls because that is what was kicking our butts at the time, Netflix wasn't a concern.
@@YelrocVideosIf Netflix wasn't a concern the upper management was more incompetent than the analysts thought.
@@garthornspike3648That may be true regardless. I guess I didn't say when, this was 2009, at the time Netflix I don't think even had streaming but if it did, it was when it was really bad where you couldn't watch a movie without it studding all the way through. At the time, blockbuster had more mail-in customers than Netflix had customers, and the mail-in was a negligible part of blockbuster. Blockbuster was already imploding before Netflix exploded.
More accurately - it wasn't streaming that killed Blockbuster. It's often forgotten that Netflix began its rise before streaming was even thought of, as a mail order DVD company.
Without watching the video.
I worked at Blockbuster in the UK and what killed it was being unable to raise prices. This was because at the advent of DVD they were initially marketed as premium product. DVD's were £20 boxsets could be £90, similar to video.
Then in the early 2000's some executive at Warner Brothers decided to dump their entire back catalog on the market for dirt cheap. So instead of renting for 3.95 you could buy for 5.99....
So what do you think that does to the value perception of the product? If you answered trash it then you're correct!
Blockbust hit a hard ceiling where they couldn't raise the prices of rental but the business costs were going up due to inflation. Add in piracy and the dawn of streaming (it was rental by mail aka LoveFilm) and BB was losing money in every direction.
I don't think Rental could survive in the era of low cost and small storage area product, because suddenly people can buy it and keep it without taking up much room.
Throw in streaming and the old adage "convenience is King". And Blockbuster was doomed to go the way of the greengrocer, the butcher and the fishmonger in the face of the supermarket.
Greed killed blockbuster, customers don't like getting pissed off and overcharged on late fees
The no late fee model was why I switched to Netflix back in the day. Plain and simple, Blockbuster was married to late fees. They couldn't conceive of a better way to extract money from their clientele.
0:31 Vegeta would be proud.
i still remember rushing to the store to return a rental, so i won't get hit with late fees. also, make sure your vhs tapes were rewinded!
The Blockbuster near me lasted longer than most by partnering with the local pizza place. If you wanted to have a movie party, you just called in and ordered a pizza and a movie and the delivery kid brought both right to your door. All you had to do is drive by the store in the next couple of days and return your movie in the drop box.
Minimal human interaction...just as nature intended.
It's kind of the same story for Sears, Wards, JCP and so on.... They thought the internet was a fad or didn't see the power of it. Sometimes size kills, as your unable to change quickly and adapt.
same thing my dad told me. You vote everyday with every dollar in your wallet/bank account. If enough customers refuse to spend on a certain good/service that company no matter if it is too big to fail will fail just like the Titanic.
Smart and frugal customers are the bulwark against crony capitalism, refusing to accept substandard, stagnant goods and services.
Their outrageous late fees are how they lost this customer.
You're right. We too often overlook the power of the consumer over the company and how we vote with our wallets.
Blockbuster was a horse and buggy company in society full of cars.
I think I still owe some late fees.
At one point, the most common card to find in a wallet within The US, was a Blockbuster card. Their cards were more common and more likely to be found in a wallet, than even Visa or MasterCard. The size and dominance of Blockbuster at its peak, cannot be over stated.
I remember Hollywood video and blockbuster, if one didnt gave the movie i wanted, id go to the other. Late fees were awful
Fantastic video and explanation
I loved Blockbuster and I missed it. Hated the late fees but was willing to pay. Saw some great movies.
Title: It's not because of Netflix
Video: It's literally because of Netflix.
All they had to do was lower their prices to beat netflix and today.. we wouldn't even known or remembered netflix.
I still have my Blockbuster card................
I think there is one blockbuster left running today in Oregon usa?
Yes it’s the last Blockbuster Video in Bend, Oregon.
The internet killed Blockbuster.
Should have bought Netflix! LOL
What was the name of the other competing video rental store? (Red & Black colors) I remember liking that one way better than Blockbuster.
Hollywood Videos.
None of this is true. I worked for a movie rental chain that FAAAAR outlived blockbuster and only went defunct in 2022 due to lockdowns and some shady business practices that might have possibly involved violating labor laws, then firing people that found out about it (don't ask me how I figured that part out)... The reason Blockbuster died wasn't because people don't want to go to a store to rent movies. People still wanted to do that well into 2020. The reason they died was because their costs increased by massive amounts that far outpaced their sales.
Blockbuster may have owned their movies, but they didn't own their buildings. They rented them, which is pretty common in retail, but they came up with this incredible idea to reduce startup costs. They would sign contracts that would allow them to pay half rent for 1/3 of their lease, then pay full rent for 1/3, then pay 1.5 times rent for the last 1/3. For simple math, let's say they signed a 15 year lease on a building for 10,000 a month. The first 5 years, they only paid 5,000, the second 5 years they paid 10,000 and the third they paid 15,000 a month. That means their costs would triple from rent alone, but they didn't factor that into their business plan. They just assumed that, with their market share, it wouldn't matter. Then, when leases went up for renewal, they weren't able to get such a sweetheart deal and they just had to deal with the higher costs. And this was literally every store in the business.
Blockbuster died to dumb management decisions, not market forces. The chain I worked for, back in 2014, was almost printing money with how well they did, and would rent out Netflix only series like Orange is the New Black. Netflix wasn't competition, is was more product. They were opening 2-3 stores a year. Again, the only reason they died was lockdowns terrified people away from going anywhere and they had been doing some pretty dumb things like misclassifying workers to avoid paying overtime and requiring some employees to work off the clock to save on payroll. Had they not gotten greedy, they probably would still be making big bucks, especially since they partnered with a pizza company to start offering pizza and a movie delivered right to your door. And they not only owned all their buildings, but they rented out space in each one to recoup any costs. Again, they were basically printing money.
Title: “…it wasn’t because of Netflix”
Actual video: “explaining in depth how it was in fact Netflix.”
This video doesn't mention that Blockbuster was far superior because people actually left their homes and went out for fun excursions to the video store. Sadly, too many Americans stay trapped in their homes in 2024. This is similar to how shopping malls were actually far superior than ordering packages to be delivered.
Blockbuster couldn’t make the pivot, even if it wanted to. Think of the cost of devalued inventory as technology changed. I’m not sure if BB owned its stores. If so, that would have been a massive real estate investment they couldn’t have unloaded quickly enough. Holding onto investors would have been impossible. Burning it all down was the only solution.
Prime example of structural economic change... Innovation will do that to you 😊
But if Blockbuster bought Netflix then they'd still be around! With $800 earned in late fees why didn't they spend a paltry $50 million to buy Netflix?? Dumbest decision EVER!!
every time I went to BlockBuster, everything was basically sold out. the commercials lied about shelves being chock full of movies lol
Never once saw that besides brand new hot films sometimes you'd need waiting list. Like when original Jurassic Park movie hit VHS. Or Bourne movies hit DVD a decade later
Blockbuster's and other big chain video rental places' strength: Hot new releases, available in large numbers.
The strength of Mom & Pop video rental stores: The availability of porn, as well as obscure titles like "Psychos In Love" and Caught On Video, featuring: Tonya Harding's honeymoon video".
One had what the other didn't, and vice-versa... and that's how each survived in the presence of each-other.
So what made Family Video survive, before the absolute streaming takeover of the likes of Netflix and PornMD? Having BOTH of the strengths of the big chains and independent video rental stores.😉
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What a roundabout way to say "It was Netflix". Felt like a House MD episode
Great work Nick! Scooby snacks for you.
Praying for Israel and the entire Middle East.
My allegiance is to Liberty, the Repubic and Democracy.
Yep. Watch and learn McDonald's and your $18.00 meals
WIthout watching I am gonna say it was stupid late fees and netflix lol
yep, really lame video hes twisting hairs and in the end
it was still netflix.
Beard Wednesday!
Holy cow this is the FIRST video where he doesnt blame socialism for something that happened
Blockbuster didn’t fall cause off Netflix it was because of itself
Blockbuster still has the possibility to raise from the ashes... Netflix is woke driven.
hint: there are more normal people, than woke idiots.