Keyes will stay on as a special advisor to DISH Network’s chairman. DISH has moved to consolidate Blockbuster’s headquarters staff at the chain’s distribution center in McKinney, Texas. Company History After selling his computing services company, David Cook turned to operating flashy, modularized video rental stores, opening his first in 1985 and adopting the moniker Blockbuster Entertainment in 1986. Entrepreneur Wayne Whizzing took over in 1987, injecting $18 million into Blockbuster and buying the company outright by the end of the year.
Huskiness’s acquisitions rapidly expanded the number of Blockbuster stores to 130. Other acquisitions (including Major Video, a 175-store chain, and Rolls, the Use’s third-largest video chain) increased the number of stores to 1,500 by 1990. Blockbuster became the largest video renter in the UK in 1992 through the purchase f 875-unit Cytosine’s. It also branched into music retailing that year when it bought the Sound Warehouse and Music Plus chains and created Blockbuster Music.
The Toweling year It cleared a majority stake In spelling Entertainment, teen was Itself acquired in 1994 by Victim for $8. 4 billion. Victim took Spelling Entertainment under its wing and formed a division for its new chain of video stores called Blockbuster Entertainment Group. Following the deal, Whizzing left the company. Over the next few years, Blockbuster experienced a rash of poor business decisions ND executive departures, starting with Steven Bernard (CEO after Victim’s 1994 takeover), who resigned in 1996 to head Huskiness’s used-car operations.
Wall-Mart veteran Bill Fields replaced him and started promoting the retailer as a “neighborhood entertainment center,” selling videotapes (instead of renting them), books, CDC, gift items, and music. After closing 50 music outlets in 1996, the company moved its headquarters from Florida to Dallas in 1997, a move many employees refused to make. Fields resigned later that year and John Antioch replaced him as chairman and CEO. Inaction’s reign began with Victim taking a $300 million charge related to the turmoil at Blockbuster. He immediately started unraveling many of Fields’ efforts, especially his focus on non-rental operations.
Antioch also set the video rental industry on its ear in 1997 by forcing the movie studios into a revenue- sharing agreement that replaced the standard practice of buying rental copies for as much as $120 each. It not only saved money, it allowed Blockbuster to stock more copies for less. The company finished returning to its rental roots by selling Blockbuster Music in 1998. By 1999 Victim spun Off minority stake in Blockbuster and the company split into three new operating units that oversee its retail outlets, e- commerce operations, and database and brand marketing. Victim, now CBS Corp.. , later sold off the rest of Blockbuster in 2004. ) In 2001 Blockbuster announced that it would decrease its VS. and video game inventory by 25% to make room for more DVD’s. Also that year, the company struck a deal with Radiograms that gave the electronics retailer space in Blockbuster outlets to sell its wares. Both companies pulled out of the agreement the following year when Blockbuster claimed Radiograms old too many products its customers didn’t want, while Radiograms said it could never make any money out of the venture.
In 2003 the company acquired Movie Trading Co. , a used DVD trading retailer with about 18 stores, in order to study the used DVD business. (The company divested these stores in 2006. ) Blockbuster in 2004 eliminated late fees on all of its in-store rentals at locations in the US and Canada. In 2004 Blockbuster acquired American Satellite and Video, operator of some 40 southeastern Rhino Video Games stores that buy, sell, and trade video games. Later hat year the company launched a $700 million takeover bid for rival Hollywood Entertainment.
Hollywood refused to consider the offer and eventually agreed to a purchase by its smaller rival, Movie Gallery, in 2005. In response, Blockbuster launched a hostile bid for Hollywood, raising its offer to $1. 3 billion. Hollywood directors rejected the Blockbuster offer and urged their shareholders to do the same. Blockbuster later abandoned the takeover effort. Movie Gallery completed its purchase of Hollywood later that year, creating a strong #2 in the industry. Trying to way customers, Blockbuster eliminated late fees on all of its traditional, in-store rentals in the US and Canada in a promotional plan in 2005.
It heavily marketed the plan to the tune of about $60 million and lost more than $500 million in late fee revenues. Shortly after its implementation, however, many Blockbuster franchisers European ten promotion Ana returned to canalling late Tees. In Alton, Blockbuster took heat over the program’s fine print, which states that rentals still have standard due dates, and if customers keep the movies or games for too long (seven days after he due date) the rental is converted into a sale and the customer is charged the difference.
The company spent about $30 million in 2005 to further develop Blockbuster Online. (Entitle filed suit against Blockbuster in 2006, claiming the video giant’s online service violates Nineteen’s patent on such a video rental system. The two settled their differences in a confidential deal in 2007. ) To enhance its online service, Blockbuster introduced a wider range of subscription plans, including the BLOCKBUSTER By Mail plan, for subscribers interested in an online-only plan. In 2007 Blockbuster closed 280 struggling stores in the US, in part to focus more on its online business.
The company closed about 300 stores in 2006. In July 2007 James Keyes, formerly president and CEO of convenience store operator 7-Eleven, Joined Blockbuster as chairman and chief executive. He succeeded John Antioch. In September the company laid off 145 employees nationwide, including workers at its corporate headquarters. Also during 2007 Blockbuster sold its Australian subsidiary and grant master franchise rights in 2007 to Video Key, an Australia-based video rental store operator. In an ill-fated bid to diversify beyond the movie rental industry, Blockbuster in 2008 made a $1. Billion offer to buy now-defunct Circuit City Stores. The company withdrew the bid in July, however, after reviewing Circuit City’s books and announcing that the deal didn’t make sense due to market conditions. During 2009 the digital entertainment division partnered with Samsung Electronics America to allow owners of Samsung Web-enabled high-definition TV’s to rent Blockbuster movies on-demand. The rentals, which cost $2 to $4 apiece and are available for 24 hours, are piped over high-speed Internet connections.
Also in 2009 Blockbuster began providing video-on-demand service through an alliance with Tivoli, and it created a partnership with digital media firm Sonic Solutions that aims to offer movies on PC’s, mobile phones, Internet-connected TV’s, and other electronic devices. Blockbuster filed for Chapter 11 bankruptcy in September 2010, reeling from mounting losses, mounting debt, and rivals that have better catered to Americans’ changed media habits. Blockbuster closed about 1,500 stores during its bankruptcy. The company was sold at auction to DISH Network in 2011 and became a subsidiary of the satellite TV service provider.