The Mega-Brands That Built America: Internet Killed the Video Store, May 5, 2024, History

The History Channel’s “The Mega-Brands That Built America” explores the rise of some of the world’s most successful businesses, and on May 5, 2024, the series shines a spotlight on the epic clash between Blockbuster and Netflix, two giants of the entertainment industry. This episode, titled “Internet Killed the Video Store,” explores the revolutionary transformation of how we consume media, from the dominance of Blockbuster to the disruptive force of Netflix’s online streaming.

The story begins with Blockbuster, founded by David Cook, a former software engineer who saw an opportunity in the video rental business. With a background in computer software, Cook opened the first Blockbuster store in Dallas, Texas, in 1985. Within a year, he expanded to three more locations, offering customers a vast selection of 8,000 VHS tapes and a modern, computerized check-out process. This stood in stark contrast to the small-scale, limited-selection video stores of the time.

Blockbuster quickly expanded under Cook’s leadership, and by 1987, it caught the attention of investors, including Wayne Huizenga, founder of Waste Management, Inc. Huizenga and other investors injected $18.5 million into the company, and Cook soon departed, with Huizenga taking control. This marked a pivotal moment, as Huizenga steered the company toward aggressive expansion, snapping up existing video store chains and opening new locations at a rapid pace. By 1988, Blockbuster reigned as America’s leading video store chain, with 400 stores nationwide.

Netflix, on the other hand, emerged from a different background. The idea for Netflix was born out of a frustrating experience that its co-founder, Reed Hastings, had with Blockbuster. Hastings, a computer scientist and mathematician, was charged a late fee for a movie rental, and this sparked the concept of Netflix. Hastings and his co-founder, Marc Randolph, envisioned a subscription-based model without late fees, and in 1997, they launched Netflix as a DVD-by-mail rental service.

While Blockbuster dominated the market, Netflix steadily gained traction. In 2000, Netflix approached Blockbuster with an offer to sell the company for $50 million. However, John Antioco, CEO of Blockbuster, dismissed the offer, believing the “dot-com hysteria” was overblown. This decision would prove to be a costly mistake, as Netflix continued to grow and innovate, eventually launching its streaming service in 2007.

The launch of Netflix’s streaming service marked a seismic shift in the media landscape. It presented consumers with a convenient, online subscription model that challenged the traditional video rental market. As Netflix gained popularity, Blockbuster struggled to adapt, burdened by debt and internal disagreements. By 2010, Blockbuster filed for bankruptcy, and its stores gradually disappeared, leaving Netflix as the dominant force in the new era of media consumption.

“Internet Killed the Video Store” tells the story of this fascinating battle between two media giants, showcasing the power of innovation and disruption. It highlights the impact of technological advancements on traditional industries and how a failure to adapt can lead to downfall.

The Mega-Brands That Built America: Internet Killed the Video Store airs Sunday May 5, 2024 at 9.00pm on History Channel