The Mega Brands That Built America Recap for Internet Killed the Video Store
-This week’s The Mega Brands That Built America focuses on streaming services….or how Internet Killed the Video Store.
-In 1975, box offices were a hit in America. The invention of the VCR took watching movies to the next level, but the machines were expensive in the beginning. However, once they became more popular, video stores began selling movies, allowing people to watch movies at their leisure.
-David Cook was a computer whiz and loved the idea of renting videos but hated the inconvenience of it all. He wished they had databases to make it easier to see what was available. He decided to scour Texas to see how they all operated so he can start his own company. He risked it all….even selling his own business….in order to make it happen.
-The biggest idea he had was to have a bigger inventory of each movie, along with a digital data base. It cost him a cool one million dollars, but with the help of his wife Sandy, he gets the idea to sell popcorn and candy to give people the real movie experience.
-Sandy suggested a membership card to keep people coming back…..and BOOM! Blockbuster Video was born, the name coming from World War II.
-Blockbuster Video first opened on October 19, 1985, quickly becoming a huge success in Texas. David decided to franchise the business but was soon in over his head.
-Wayne Huizenga soon becomes involved and despite his misgivings, decides to help David.
-Despite the partnership, the two men had different visions of what they wanted. David ends up selling it to Wayne, who expands the business, opening over 2,000 locations nationwide.
-Wayne didn’t pay attention to growing technology, a decision that would cause a lot of issues with the advent of the internet.
-During the growth of the internet, Reed Hastings and Marc Randolph decide to partner up and open a new business to compete with Amazon.
-They ended up getting the idea for what would soon be known as Netflix due to paying a late fee at Blockbuster. It begins as a way to send DVDs in the mail to avoid dealing with late fees and going to the store to return movies.
-Blockbuster continues to expand due to a merge with Viacom.
-Marc and Reed test out their DVD idea by mailing themselves a Patsy Cline DVD. They are able to mail and receive it with much success….no scratches or breaks!
-DVDs are now becoming more popular, but Blockbuster vetoes the idea, thinking it is a passing fad.
-On April 14, 1998, Netflix is born! The first movie requested was Beetlejuice and before long, several more movies were rented, with a bell ringing each time. They are so successful that the website ended up crashing, causing them to freak out. Despite this, they are able to fix things and see a silver lining….they knew this would become big.
-By 1999, DVDs are growing more popular. New Blockbuster CEO Joe Antioco realizes this is no longer a passing fad and decides to also get into the DVD side of things.
-Netflix realizes that people don’t want to wait for movies, so they decide to do a subscription program, where people pay a monthly fee for unlimited movies. The gamble pays off and by the year 2000, they are a runaway success….until the dot com businesses hit a snag in the stock market.
-Marc and Reed try to work out a deal with Blockbuster, but John thinks it is not worth the cost of fifty million dollars.
-The two companies end up competing against each other, with Blockbuster coming up with their own online company. In 2004, Blockbuster also eliminate late fees. However, they end up losing money.
-Blockbuster ends up struggling with running both a storefront and an online business.
-Netflix, for their part, put 40 million dollars into making the company into a streaming service. In 2007, it is launched and became what we all know and love. The addition of original programming only added to their success.
-Netflix is now worth 244 BILLION dollars.
-John Antioco leaves Blockbuster in 2007 and invest in Netflix.
-Blockbuster declared bankruptcy in 2010 and is no longer in business.
-More next week, stay tuned.
