Blockbuster Rejects Netflix for $50 Million
"Make it a Blockbuster night!" If you came of age in the 1980s, you spent way too many Friday nights at your local Blockbuster browsing the "new release" shelves or raiding the return bin for the hottest titles. At the top of its game, Blockbuster ran 9,904 stores worldwide with revenue topping $5.9 billion a year [source: Douglas].
The secret to Blockbuster's early success was using computers to make sure that every store was stocked with the most popular movies. But once Blockbuster nailed its winning formula — charging half a billion dollars in late fees per year — it failed to adapt to the changing tastes of American consumers.
In the late 1990s, an Internet upstart named Netflix began offering a DVD-by-mail service. The subscription service exploded in popularity, and Netflix executives flew down to Texas in 2000 to make an offer to Blockbuster CEO John Antioco. For $50 million, Netflix would join forces with Blockbuster and help it launch its own online and DVD-by-mail service [source: Graser]. Antioco laughed Netflix out of the office, seeing it as a niche player.
Who's laughing now? As of May 2014, Netflix is valued at more than $20 billion and Blockbuster — which filed for bankruptcy in 2010 — closed its last retail stores and canceled its copycat DVD-by-mail service in 2013 [source: Mauk].