Blockbuster, also known as Blockbuster Video, was an American company that started in 1985 as a single store where people could rent home videos. Over time, it grew into a large chain of stores that offered video game rentals, mail-order DVDs, streaming services, video on demand, and movie theaters. The company expanded to other countries during the 1990s. In 2004, Blockbuster had 84,300 employees worldwide and operated 9,094 stores.

The company’s decline was caused by poor leadership, the effects of the Great Recession, and strong competition from Netflix’s mail-order service, video on demand (including streaming), and Redbox machines that let customers rent videos without help. The company lost a lot of money in the late 2000s and filed for bankruptcy protection in 2010. The next year, Dish Network, a satellite television provider, bought Blockbuster’s remaining 1,700 stores. By 2014, the last 300 company-owned stores were closed.

Although Dish Network no longer supported the Blockbuster brand, it kept a few franchise agreements, allowing some privately owned stores to stay open. After more store closures in 2019, only one franchised Blockbuster store remained, located in Bend, Oregon. As of 2025, the company still exists under the name BB Liquidating, Inc., which became well-known during the GameStop short squeeze in 2021.

History

Blockbuster's history began with a company called Cook Data Services, founded by David Cook in 1978. This company aimed to provide software services to the oil and gas industries in Texas but was not successful. David Cook’s wife, Sandy, wanted to enter the video business. After studying the industry, David used money from selling part of his company to buy a video store franchise called Video Works in Dallas. When Video Works refused to let him use a blue-and-yellow design for his store, he left the franchise and opened the first Blockbuster Video store in 1985 under his own company, Blockbuster Video Inc. Seeing the potential in video rentals, David left the oil industry and began franchising Blockbuster stores.

The first Blockbuster store opened on October 19, 1985, in Dallas, Texas, with 8,000 VHS tapes and 2,000 Beta tapes. The name "Blockbuster" comes from a Hollywood term for a successful movie. David’s experience managing large databases helped improve the video rental industry. After early success, David built a $6-million warehouse in Garland, Texas, to support future growth and help new stores open quickly. Blockbuster customized store inventories based on local neighborhoods and customer preferences.

In 1987, Wayne Huizenga, co-founder of Waste Management, agreed to buy several Blockbuster stores. At that time, there were 19 stores, which impressed Huizenga’s associate, John Melk, because of their efficiency, family-friendly image, and business model. Huizenga and Melk used strategies from their waste business and Ray Kroc’s expansion methods to grow Blockbuster rapidly, opening a new store every 24 hours. They took over existing Blockbuster franchises and acquired competitors like Major Video. In 1989, Nintendo tried to stop Blockbuster from renting video games by filing lawsuits and lobbying Congress, but Blockbuster won the legal battle, allowing video game rentals to continue.

Blockbuster sponsored the Blockbuster Bowl, a football event that started in 1990 and was held at Joe Robbie Stadium near Miami. The first three events used the Blockbuster name, but the company later stopped sponsoring the event.

In 1990, Blockbuster bought Erol’s, a rival with over 250 stores. In 1992, Blockbuster acquired Sound Warehouse and Music Plus, creating Blockbuster Music. In 1993, Blockbuster gained control of Spelling Entertainment Group, a media company owned by Aaron Spelling. Blockbuster also purchased Super Club Retail Entertainment Corp. from Philips Electronics, adding about 270 music stores and 160 video stores to its company. Blockbuster also owned 35% of Republic Pictures, which later merged with Spelling in 1994.

Blockbuster became a multibillion-dollar company, but Huizenga worried about new technologies like video on demand and cable television. In 1991, Blockbuster’s stock dropped more than 10% after Time Warner announced plans to upgrade its cable system. In 1993, Huizenga invested in Viacom but avoided buying a cable company due to uncertainty. He also considered building a large amusement park in Florida but never completed the plan. In 1994, Viacom bought Blockbuster for $8.4 billion to help fund its bid for Paramount. By the late 1990s, Blockbuster’s stock value had dropped to about $4.6 billion.

In 1994, Blockbuster tested a concept called the Blockbuster Block Party in Albuquerque, New Mexico, and Indianapolis, Indiana. This was an entertainment complex for adults with themed areas, including a restaurant, games, and rides, housed in a building the size of a city block.

The original company, Blockbuster Video Inc., was merged into Blockbuster Entertainment Inc. In 1996, Blockbuster Entertainment Inc. became Blockbuster Entertainment Corporation, and the retail stores were renamed Blockbuster. The logo changed slightly but kept the same font. In 1996, Blockbuster moved its headquarters from Fort Lauderdale, Florida, to Dallas, Texas, offering relocation packages to employees.

In 1997, John Antioco became Blockbuster’s CEO after leaving Taco Bell. Warner Bros. offered Blockbuster a deal to rent new DVDs before they were sold to the public, but Blockbuster refused. This led Warner Bros. to lower DVD prices, allowing Walmart and other retailers to sell DVDs cheaper than Blockbuster. This hurt Blockbuster’s business model.

In 1998, Blockbuster created DEJ Productions to acquire 225 films for exclusive use in its stores before selling them to First Look Studios in 2005. That same year, Blockbuster launched a loyalty program called Blockbuster Rewards, letting customers earn free rentals.

In 1998, Viacom sold Blockbuster Music to Wherehouse Entertainment, which later became part of Trans World Entertainment in 2003. In 2000, Blockbuster partnered with Enron to create a video-on-demand service, but Enron ended the deal in 2001 due to concerns about Blockbuster’s film supply. Enron also filed for bankruptcy that year.

Business model

The traditional business model for video rental stores was to pay a large one-time fee, about $65, for each video and allow customers to rent it unlimited times for the life of the video. Sumner Redstone, whose company Viacom owned Blockbuster at the time, helped create a new system where Blockbuster paid less for videos and kept 60% of the rental fee, giving the other 40% to the studio that made the movie. Blockbuster shared rental details with Rentrak, a company that tracks media usage. Blockbuster also benefited because movies were rarely sold at low prices when they first came out. Customers often had to rent, wait, or buy the movie on tape at a much higher price, which was set by the manufacturer and aimed mainly at rental stores and some film fans, costing between $70 and $100 per movie.

Blockbuster stores focused on offering access to the most popular new movies. They worked with studios to get early access to new releases and kept many copies of these new movies in stores. Their selection of movies was narrower than that of traditional independent video stores. Most shelf space was used for popular titles, which were placed on shelves with their full covers visible so customers could easily see and browse them. Blockbuster sometimes signed special agreements with studios to get earlier access to new movies than other companies. These agreements included Blockbuster being the only rental chain to offer new releases from companies like WWE, Funimation Entertainment, Paramount, DreamWorks, Universal, and many others.

When a movie was no longer a new release, Blockbuster kept a few copies in stores and sold the rest for lower prices as "previously viewed." Older movies were labeled as "Blockbuster Favorite" and placed in a different section of the store. Most Blockbuster locations also allowed customers to trade in used movies, TV shows, and video games.

Since Blockbuster was founded in 1985, the company never carried adult films to keep its brand family-friendly. However, it did offer movies with ratings like R and unrated films.

Other ventures

Blockbuster Entertainment Inc. held an annual awards show called the Blockbuster Entertainment Awards from 1995 to 2001. In November 2001, Blockbuster announced it would cancel the 2002 awards show because of concerns about low viewership and fewer celebrity attendees after the September 11 attacks.

Blockbuster Express was a movie-rental kiosk brand that NCR Corporation was allowed to use. In 2011, about 10,000 Blockbuster Express kiosks were operating. These kiosks were not connected to Blockbuster LLC, its stores, its DVD-by-mail service, or its online streaming service, except for the use of the Blockbuster brand name.

The names Blockbuster Express and Blockbuster Video Express were also used for small Blockbuster retail stores in the United Kingdom.

In 2004, Blockbuster opened small video game rental and sales stores called GameRush inside some Blockbuster locations in certain areas. Blockbuster also bought Rhino Video Games, a chain of video game stores in the Southwest, and operated it alongside GameRush. These stores sold and bought DVDs, games, game consoles, and accessories. GameRush competed with stores like GameStop and GameCrazy. Blockbuster used its store locations to gain attention and promoted the stores with video-game tournaments, special trade-in offers, and a more modern look. However, when Blockbuster stopped charging late fees, GameRush was closed down. In January 2007, Blockbuster sold Rhino Video Games to GameStop Corp. According to Blockbuster’s Twitter account, GameRush was part of the “new Blockbuster” in 2016 and had its own Twitter profile, but the GameRush account has not been active since January 2017.

In 1993, Blockbuster invested in an indoor kids’ play restaurant called Discovery Zone. In 1995, Blockbuster bought more shares to control the company. Discovery Zone filed for bankruptcy on March 26, 1996, after management changes and rapid expansion caused heavy debt. A year later, the company restarted under Wellspring Associates, and Blockbuster no longer controlled it. Discovery Zone closed half of its locations in 1999 and sold thirteen others to the parent company of Chuck E. Cheese’s. The remaining locations closed in December 2001. In February 2020, Discovery Zone reopened as a single location in Cincinnati, Ohio. It is still operating, but it is not owned by Blockbuster.

International operations

Blockbuster entered the Canadian market in November 1989. The branch operated independently and remained financially stable at first. Unlike international Blockbuster franchises, Blockbuster Canada sold mobile phones when it partnered with Wind Mobile in December 2009. Phone sales began in Toronto and Calgary and later expanded to other cities with Wind service. Some stores included a full Wind "store-in-a-store" for postpaid activations and a larger selection of devices. However, on May 3, 2011, it was announced that the company had gone into receivership.

On May 25, 2011, it was announced that 146 stores, about 35% of Blockbuster Canada’s locations, would close by June 18, 2011. On August 31, 2011, Blockbuster Canada stated that no buyer had been found for its remaining stores acceptable to the court-appointed bankruptcy receiver. The company would close all stores by December 31, 2011. Blockbuster had acted as a guarantor for the company’s remaining debt.

A location in Owen Sound, Ontario, remained with its signs intact after closing in 2011. As of 2025, this site was the last Blockbuster in Canada and appeared in Chandler Levack’s 2022 film I Like Movies.

The first Mexican Blockbuster stores opened in 1991. In September 2015, all remaining Blockbuster retail stores in Mexico (263 total) were rebranded as "The B Store." Video rental space decreased from 70% to 20%, with the remaining space used for technology and electronics sales. This change occurred because the owners did not renew their license with Blockbuster, and the existing license was about to expire. All remaining B-stores closed by July 2016.

In March 1989, Blockbuster opened its first store in the United Kingdom on Walworth Road in London. Before this, several other video stores in the UK used the name Blockbuster, many of which Blockbuster bought out. One chain, based in Portsmouth and founded in 1984, could not be bought. This chain claimed to be the third-largest video chain in the UK, so Blockbuster avoided the Portsmouth area. In February 1992, Blockbuster purchased Citivision PLC, the largest home-video company in Britain, for $81 million (about $162 million in 2024). At the time, Citivision operated about 775 stores in Britain branded as Ritz. Blockbuster UK stores offered trade-in services for pre-owned DVDs, console games, and gaming accessories, providing either store credit or cash. Stores also matched prices with competitors. At its peak in 2002, Blockbuster UK operated over 800 stores.

In early 2013, Blockbuster UK had 528 locations. On January 16, 2013, Blockbuster placed its UK subsidiaries in administration, putting over 4,000 jobs at risk. Non-UK stores were unaffected and continued operating. On February 1, 2013, many Blockbuster stores in the UK closed. The UK business was purchased by restructuring firm Gordon Brothers Europe on March 23, 2013, and operated as TS Operations with 264 branches. On October 29, 2013, Blockbuster UK entered administration again. On November 14, 2013, 72 store closures were announced, with another 62 on December 5. A week later, it was announced that all remaining stores would close on December 16, 2013, with stock cleared the day before.

In September 2018, a pop-up Blockbuster-style store opened in Shoreditch, East London, for two days to coincide with the release of Deadpool 2. The store gave away 1,989 copies of the film, referencing Blockbuster’s 1989 entry into the UK. In 2019, Blockbuster lent its name to a party game published by Big Potato Games.

In October 1996, Blockbuster acquired the Irish video store chain Xtra-vision, keeping the brand name. In March 2010, Blockbuster announced plans to sell all European operations. Xtra-vision was sold at a loss in August 2009 to Birchhall Investments Limited. All remaining stores closed in 2016, leaving only online services and vending machines. In June 2021, Xtra-vision Xpress was placed into voluntary receivership.

In 1995, Blockbuster partnered with Hubert Burda Media to open stores in Germany. Blockbuster left the German market in 1997.

Blockbuster entered Denmark in 1996 by acquiring 29 Christianshavn video stores. By 2009, Blockbuster Denmark had 72 stores. In 2013, the rights to the Blockbuster brand in Denmark were sold to TDC, a Danish telecommunications company, excluding the 46 remaining stores, which continued as RecycleIT A/S. RecycleIT diversified into refurbishing and reselling electronics, in addition to selling and renting games and movies. The goal was to rename all stores by July 1, 2014, but only 12 were renamed by June 2014. RecycleIT A/S filed for bankruptcy that year. The 12 stores were bought by Blue City, which planned to phase out game and movie sales by 2016. However, seven stores closed in 2015. By 2017, five remaining stores focused on second-hand electronics. The Blockbuster On Demand service remains active in Nordic countries, offering streaming and 48-hour film rentals. The Blockbuster app is pre-installed on some Smart TVs and available on streaming devices like Google Chromecast. The Blockbuster brand rights are now held by Nuuday.

In December 2002, the first Blockbuster store opened in Norway, followed by another in Oslo in 2003. The goal was to acquire an existing video chain, but this failed. Blockbuster attempted to build a Norwegian chain from scratch, but both stores closed in spring 2004.

In March 1991, Fujita Den Trading (the master franchise owner of McDonald’s in Japan) and Blockbuster Inc. formed a joint venture to open Japan’s first Blockbuster stores. By October 1992, 15 stores were opened, with four near McDonald’s locations and most in Tokyo. Japanese stores occupied about half the floor space of U.S. stores due to limited real estate. By June 1996, 32 stores were operating, with a goal of 150 by 1998. Blockbuster Japan faced competition from Tsutaya, a chain with 817 outlets. Blockbuster’s strategy of "wholesome home entertainment" avoided adult entertainment and

Digital initiatives

In 1997, Enron Corporation entered the broadband market by building and buying thousands of miles of fiber optic cables across the United States. In 2001, Enron and Blockbuster Inc. tried to create a 20-year agreement to stream movies on demand using Enron’s fiber optic network. However, the deal, which was heavily promoted, did not work, and Enron’s stock prices dropped after the announcement.

In response to Netflix’s success with mail-order DVD rentals, Blockbuster launched Blockbuster Online on August 11, 2004. This service allowed customers to rent DVDs by mail nationwide, with unlimited rentals for a flat monthly fee of $19.99 for up to three DVDs at a time.

Blockbuster’s US online operation began with about 10 warehouses. Over the next few years, the number of warehouses grew to 41, and the company expanded to more than 1,400 stores in the Blockbuster Online network. Most independent Blockbuster franchises did not support the Total Access program. By the end of the third quarter of 2006, Blockbuster had 1.5 million subscribers.

Blockbuster’s efforts to copy Netflix’s online rental model led Netflix to sue Blockbuster for patent infringement. Blockbuster responded by suing Netflix, claiming Netflix’s patent was used to unfairly control the market. The lawsuits were settled, though the terms were not made public. Later reports stated that Netflix received $4.1 million from Blockbuster in 2007 (equivalent to about $5.96 million in 2024).

Blockbuster offered multiple online movie rental plans. In some cities, customers could add video games to their rental queue, but these games required an extra fee that was not shown until the end of the billing cycle. Until July 26, 2007, Blockbuster allowed unlimited free in-store exchanges of online rentals for all plans. After that date, the policy changed several times, and by March 2010, customers could only exchange a limited number of rentals in person.

By the end of 2006, Blockbuster Total Access had 2.2 million customers, exceeding its original goal of 2 million. After a major advertising campaign that contributed to Blockbuster’s $46.4 million net loss in the first quarter of 2007 (about $67.4 million in 2024), the Total Access program reached 3 million subscribers, the company’s highest growth in subscribers ever. However, by 2009, Blockbuster stopped sharing subscriber numbers with reporters.

On January 5, 2007, Southern Stores Inc., one of Blockbuster’s largest franchise operators, sued Blockbuster in federal court, claiming that Blockbuster Online and Blockbuster Total Access violated the franchise agreement. On August 8, 2007, Blockbuster announced a deal to buy Movielink for $6.6 million.

On August 6, 2010, Blockbuster By Mail subscribers gained access to Blockbuster’s library of video games, in addition to movies and TV shows.

On March 31, 2012, Blockbuster On Demand stopped supporting set-top box media players, such as Vudu, WDTV, and Roku. Supported devices were limited to computers, Blu-ray players, select televisions, and cell phones.

On February 26, 2013, Roku, Inc. announced that Blockbuster On Demand was available on Roku’s channel store. Supported devices now included computers, Blu-ray players, select televisions, cell phones, and the Roku set-top box.

In November 2013, Dish Network announced that its DVD-by-mail service would shut down by mid-December.

Rental fees in the UK ranged from £3.50 to £4.50 and lasted for five nights, typically from Monday to Friday due to postal service schedules. Late fees of £0.70 to £0.90 per disc were charged if a disc was not returned on time.

In May 2004, Blockbuster introduced an online subscription service in the UK. The unlimited three-disc plan cost £14.99 per month but did not allow in-store exchanges, unlike the US service. In April 2005, an "OnlineXtra" service was added, costing £2 per month and allowing two extra discs to be sent by mail. These discs could be exchanged in stores, but others could not. The program ended in 2006, but a version limited to in-store exchanges returned in early 2008. A "Click & Collect" service launched in September 2010, allowing customers to reserve movies in stores, though regular rental fees applied until in-store exchanges were added in May 2012. Game reservations were supported starting in November 2011.

In 2008, Blockbuster UK redesigned its website, adding an online store, a retail stock checker, better search tools, and a well-received layout. In-store pickup and exclusive titles were added in 2009. Some exclusive titles included Gran Torino, Changeling, Taken, and Knowing. Blockbuster also had exclusive rights to rent Universal Pictures content online in the UK, giving it an advantage over competitors like HMV, Play, and LoveFilm.

In January 2010, Blockbuster UK launched an online blog. In April 2010, the website improved with better search tools, product pages, and links to social networks. A monthly online video show called BB Insider ran from May 2010 to January 2011, and an iPhone app was released in September 2010. In 2011, Blockbuster UK lowered prices and introduced a loyalty card program.

Price cuts for Blockbuster UK’s online pay-per-rent service followed. Though some ads claimed no late fees, the fine print stated an extra pound per additional rental night. A "Top Ticket" feature was added in April 2011, allowing subscription customers to rent an extra movie for free. Support for selling used movie and game discs online was added in July 2011. The website was improved in September 2011, and a new TV section was added the following month.

In February 2012, Blockbuster UK added 3D Blu-rays to its offerings. In May 2012, Blockbuster UK partnered with IGN to launch a new Blockbuster VIP Gamer loyalty program.

On January 16, 2013, Blockbuster UK entered administration, appointing Deloitte as company administrators, raising concerns about the future of its 528 stores. Deloitte announced that 160 stores would close in

Advertising

Blockbuster's most famous ad campaign started in 2002 during Super Bowl XXXVI. It featured the voices of James Woods and Jim Belushi as Carl and Ray, a rabbit and a guinea pig in a pet shop across from a Blockbuster store. The first campaign ended in 2003. The Carl and Ray campaign returned in 2007, beginning with a commercial during Super Bowl XLI.

In 2005, Blockbuster launched a marketing campaign to explain changes to its late fee policy and promised "No Late Fees" for rentals. This program led to investigations and claims of dishonesty in 48 states and the District of Columbia. State officials, including Bill Lockyer of California, Greg Abbott of Texas, and Eliot Spitzer of New York, said customers were automatically charged the full cost of late rentals and a restocking fee for items returned after 30 days. Blockbuster agreed to pay for the states' investigation costs, explain the program's terms clearly to customers, and reimburse customers who were charged fees before the program was clarified. New Jersey filed a separate lawsuit and was not part of the settlement.

This controversy followed a similar lawsuit settled in 2002 in Texas. That case, which claimed Blockbuster's late fees were extremely high, caused the company to pay $9.25 million in legal fees and offer $450 million in coupons for late fee refunds. These coupons allowed customers to rent one movie for free when they rented another. Blockbuster estimated the coupons would cost about $45 million depending on how many customers used them. A lawyer for the customers estimated the cost could be closer to $100 million if 20% of customers used the coupons, based on a similar case in Michigan.

These changes were also made in international stores, such as those in Canada, to avoid more lawsuits.

In 2010, Blockbuster brought back late fees in the United States, calling them "Additional Daily Rates." Under this plan, rentals were limited to a certain number of days, and customers were charged daily rates if they kept movies past the allowed time.

Presidents and CEOs

• John F. Antioco, CEO: 1997–2007
• James W. Keyes, CEO: 2007–2011
• Michael Kelly, president: 2011–2015