Why did Blockbuster have late fees anyway? Why was the DVD the thing that probably really killed Blockbuster? And is there any scenario where Blockbuster, not Netflix, could have won? Be kind, rewind with us today! Rad 80s90s History is visiting Blockbuster Video! Welcome to RAD! In the 80s90s History Podcast, recounting, the last time things were relatively normal and chill, the last two decades of the 20th century I'm your host, Brian McCullough.
Today we're going to talk about a dearly departed landmark in both media and retail before the internet came around and changed everything. My amazing special guest is investor and tech writer, but just writer in general I suppose MG Siegler MG. Welcome to 80s90s History. Thanks for having me, Brian. Good to be here. You strike me as a movie guy, so tell me your relationship with the dearly departed Blockbuster Video or actually just the video rental store of your youth full stop.
Yeah, I have a pretty romantic and nostalgic past with regard to video stores. I grew up in Ohio and where I lived they had a sort of a local mom and pop video shop for many years that we would go to. This was the old school days of VHS, but they would do this fun little thing where they had dog tags that they would make you take off of the cover of the video because they would keep all the videos in the back so no one would steal them I assume.
So if it had a dog tag you knew that the video was available and you would walk that up to the counter and then go rent it. So that's where I grew up and got my start going to video stores. That was replaced shortly thereafter not by Blockbuster by another video store which I remember the name of because I was a little bit older and going to it called Flix, which was also just a local video store in Ohio and Cleveland, outside of Cleveland, Ohio.
That's the one where Blockbuster first came out of my radar because there was a blockbuster that moved about two or three blocks away from that store, you know, when I was I think maybe early teens and that, you know, as we'll talk about had all sorts of disruptive disruptive areas in that in that world.
And so it was interesting Flix the again the sort of more mom and pop like store ended up I think doing okay against Blockbuster once it moved in but largely because they were known to have rentals in the adult space.
And so there would be you know an area that was behind sort of saloon doors these these doors that kids would try to peek into when they were swinging back and forth that that kept them afloat. But yeah, that's that's sort of the early history that I recall of of videos and my parents rent renting VHS tapes that were, you know, probably a little bit to mature for for my age, not the adult variety of course, but I just think I remember my mom once bringing home the movie critters, which was like a whole lot of things.
And so I think the critters, which was like a horror movie from the the 1980s, I think maybe early 90s, which she brought home because she thought the cover look cute sort of looked like a ET type thing, you know, aliens is sort of weird looking green thing total,
little massacre horror movie that did not go over well with me and my younger sister. That's funny because I think my parents liked the video store because they could control it more we were never allowed to have HBO or anything like that because they figured I would that's how I would stumble on movies that they thought were inappropriate.
So it's interesting that it's it's your mom that's bringing home the inappropriate. She had she had always had an act to figure out the wrong movie to pick just by the cover of that VHS tape. So I have similar memories there were a couple hole in the wall mom and pop stores initially like I let's imagine that it's like 1985ish that we get a VCR.
And I to remember the adult section which was in the back or behind curtains or something like that and always being intrigued by that section that you're not allowed in. But I think it was either like let's call it 8889. And then one of the things about blockbuster we can talk about this a little bit in terms of the 90s context is it generally when blockbuster came to your town they had a bigger selection.
Then the hole in the wall mom and pop stores. However, my connection with that blockbuster which actually the other reason it was important was I could bike to it it was right outside my neighborhood in Florida and I also that was essentially my first job I started working at blockbuster video my sophomore year of college or of high school.
And then I think I was working there a couple summers in college so let's let's say that I stopped working at that local blockbuster video in 1999ish I'm actually wearing my make it a blockbuster night shirt I could find my uniform somewhere I'm sure it wouldn't fit me wouldn't do me any good to find it but I you are well into the DVD age then not well into but it well into or something you are you are stepping on something that we're going to discuss.
I also mg you should know that I rose so high as to be assistant manager so I can also speak to you a little bit about the business model of a blockbuster store and things like that is that the is that the Michael Scott title or the white truth title that's probably the white
true and they only gave it to me because I was the only one that came back I was probably one of the longest serving teenagers that they had at that store and so for a dollar extra an hour they just gave me the assistant manager title when the managers weren't there so it wasn't even really I didn't
I didn't realize I was walking into your total wheelhouse exactly exactly so let's let's get in let's get into it a little bit I as I always do I have some rabbit hole questions or facts that I found for you so we're going to start getting into some of those but just generally you know to frame things for non eighties and 90s kids
movies were sort of the last holdout in terms of media that you could consume at home you know going back to the phonograph you had music that you could consume at home books obviously has always been a personal consumption thing TV brought video into the house for the first time but the point is is that as late as the 1980s if a movie left movie theaters that was it you might not have a chance to see the Godfather again or you know they would do things like
re-release certain movies in theaters like sound of music right Disney yeah and in the in the in the 60s and 70s they started to do a thing where they would you know you would have the Sunday night movies so like again I always think of sound of music coming out or being on TV every Easter or so the the thing that changes this is the technology of the video cassette
there were famously two standards beta max and VHS that were introduced respectively in 1975 and 1976 and after beta max was launched in the United States Magnetic video chief executive Andre Blay wrote letters to all the major film studios offering to license the rights to their films as a sort of we will release these for you or we you know we'll put them on video
cassettes and sell them but early on they struck on the idea of maybe this could be not you you buy something because think about it again the only media that you would have a sort of a history of consuming and having a collection of would be books and music no one at this point had the conception of oh I'll have a home movie
and the giant film reel and a projector yeah hundred hundred thousands of dollars you would be spending hundreds of thousands of dollars probably to in order to do that and space you would need a people had that I knew people that had like real to real stuff you know theater setups that way so because of the costs and because of various other business impediments
and essentially home video was born as a rental medium the studios felt that virtually all sales of video cassettes would be to the rental market and so they set their prices accordingly when today well if for the to the degree that people still buy physical media you can buy a movie for you know ten bucks twenty bucks whatever that was not the case in in the seventies and early eighties if you wanted to purchase a a film on video cassette it would cost you hundreds and hundreds of dollars
I'm out of that yeah yeah so I think flex the one story was mentioning they they sold it was it was usually only like Disney right because they would do like the discounted versions like where they would sell because they knew that kids families wanted to watch those over and over again on VHS but the other ones like yeah if you would
be scared about buying bigot father whatever it's like over a hundred dollars to buy it on VHS so actually I mean that's sort of the windowing thing that Hollywood that is broken down for Hollywood so in in the golden era of video rentals the way it works is a movie's released in theaters and then roughly what six months later it goes to the rental store first
can't buy it probably can't buy it for another six months and in between that period it would go to HBO cinemas those places so so the sort of windowing is theatrical release home video rental release
right pay TV and also I guess TV right and and positive airline be seeing right in airplane too but at the very end of that windowing is the idea that wait you really want to pay twenty thirty bucks for Jurassic Park okay fine a year later you can yeah so they in 1977 when magnetic video originally price the cassettes at 50 to 70 each
and they were only really selling them the wholesalers and there basically advertising to try to seed a market and somebody that saw the the advertisements for hey maybe start a video rental business is rabbit hole fact number one the first so I'll let you read it sorry
oh yeah so the first video rental stores we know at lunch in 1977 in Los Angeles one of the people that sees the ad for magnetic video is someone named George atkinson who died in 2005 by the way so he saw the entire industries rise and fall
instead of buying the films for himself atkinson jumped at the chance on this ad to to purchase the videos and rent them out to other people he had already been renting out camera equipment and you know film equipment to people who couldn't afford to buy it so why not do it with the movies themselves as opposed to how you make the movies
and to raise capital atkinson hit on the idea of a subscription fee sort of a membership fee and initially to just be able to rent videos from atkinson you had to pay a membership fee of fifty dollars annually or a hundred dollars for a lifetime after which you then had the right to rent videos for ten dollars a night which is still incredibly expensive yeah
and this is at a time when vcrs and video players were found in less than three percent of households but at the same time the response was through the roof when atkinson himself placed ads in local L.A. papers he had more than a thousand people registered in advance of even opening his store
so in late 1977 atkinson opens a store called video station puts the tapes on display the first rental this might be apocryphal is a beta max copy of the sound of music again the movie that I remember being on TV one of the rare few now as often happens when there's new technology it hollywood is nervous at first and initially yeah well and there's a there's a whole you know to this day history of a I know today now it's a I
right and then we remember like Napster with the music industry the video cassette technology itself remember beta max and vhs one of the things that the that Hollywood is afraid of is that well sure if we put our movies on your video cassette that's fine
we'll sell that to you but also you can record live TV and or you could you know set it up so that you could record our movie and then maybe you know sell that yourself so take your copy of sound of music dub it and try and sell it to ten of your friends
yeah so in 1978 hollywood threatens video station with legal action claiming a violation of their copyright they saw also you know we got a fear that hollywood sees this as a threat to their revenue stream in terms of people actually going to the movie so you know again this is not insane if you're Hollywood you think this is our cash cow if people can
watch movies at home why would they ever go to the theater which funny enough is still sort of something yeah still the same same sorry our wondering is true today but it's interesting though that it's it's sort of those are two distinct issues but they're both and they're both coming to ahead at the same time right like so so just like you're talking about the notion that will it stop people from going to the movies which as you're as we're talking about is still something that causes so much consternation today like is at the end of of theaters of the yet the
theatrical experience sort of exacerbated by covid times and whatnot but so that plays out to this day but the VHS part of it which I assume like part of the biggest part was as you're talking about it as we'll get to in the lawsuit of the ability to record because it was like one of the first mediums if I'm right that was actually
read right in home versus just read only like records and because also you know think of the audio cassette came out at the same time and that was also the issue if you had the boom box with what that's why we made mixed tapes in the 90s is because so it is it is weird because I did do the research that tape technology as a as a medium of storing things you know tape technology was important for early computers as well but that was invented all the way back in the 30s so it's one of those weird
technologies that took a surprising amount of time to to come to market I guess but right it's it tape technology I guess was the thing that like you're saying was read right that was possible with a phonograph or anything like that before we had a pretty early I think it was yeah it was probably early to mid 80s that when we got our first we had a VHS player and one of the reasons why we had that particular one which I to this day
remember was so cumbersome to use but it's because we also had a home camcorder that recorded directly to VHS right and so that was like a huge part of having that because it could we could record home videos on you know a giant shoulder mounted VHS thing at one point I believe we had one where you had to like take the VHS player with you like in a pack on your shoulder
because that was also the recorder right for shooting the shooting to videotape and so yeah again these things are so intertwined like the recording and the playback element of it you almost wonder like if they adjust if they somehow figured out a way to just go down the path of it only being you know a medium from which you watch something and don't record it would that have helped you know ease tensions a little bit but then
really not because every time Hollywood's Hollywood yeah this was on a business model that makes any time that that gets disrupted even a little bit they get nervous and and try to fight it initially yeah which which this gets resolved with as I said rabbit hole fact number two yes so the VCR as technology wasn't safe until Sony corp of America versus universal city studios also known as the beta max case
legal case right it was also because Sony created beta max right because this is this goes this comes back around later when there was blue ray versus HD DVD as well right right right there's always these these groups that get together behind one of the formats and Sony was the next one right yeah and then it was like that consortium of what's the Dutch tech company that yeah yeah
we could look it up but yeah so the initial rulings were all in favor of Hollywood as they as they litigate this and the heavy hitters behind it are people like you would think like Walt Disney apparently bankrolled a lot of the litigation as they're want to do and there were a bunch of rulings by you know like the ninth circuit quarter of appeals for years and years and years
and so the case makes its way all the way to the Supreme Court which heard arguments in 1983 issued a decision on January 17th 1984 and in a five to four ruling the Supreme Court reversed the ninth circuit's decision and held that the sale of home video recording devices to the general public did not constitute
a contributory infringement of copyrights what I want to point out there an underlying is that was a five to four ruling that was a close call where would we be today if the president had been set on the other side yeah you know there's like a world in which you can't really record or mix anything and your own and like you know obviously that was the era before personal computers were ubiquitous but if you you extrapolate that out to where that would be now
like all sorts of different ways industries all sorts of industries would have had to have gone if that's you know deemed to be illegal to have that type of technology so I looked it up VHS was introduced by the Victor company of Japan which is JVC which is what I was thinking was a Dutch company but you know confused things and this Halloween ghoul all out with Instacart where they're hunting for the perfect costume I'm that giant bag of candy or casting spells with eerie decor
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can't require regulatory fees included for qualifying accounts $35 connection charge applies now you know those charts that you and I see on Twitter all and play a social media all the time of like the adoption of technology and the adoption of the VCR was until Internet times held up as one of the technologies that was adopted the quickest but when I'm looking at these numbers it doesn't feel that quick to me so you can buy a VCR in North America for the first time in 1975
years later 1980 only 1.1% of people have a VCR in their home now again the technology is new and as with all new technology it's super expensive so it is a luxury item for mostly rich people but by 1985 the numbers only up to 20% and as late as 1990 only 66% of American households had VCRs so it was 15 years to reach essentially 50% household penetration the highest percentage that I saw they reached about 90% of homes in North America had a VCR I think by like 2005
do you think with some of that help back by the beta max versus VHS sort of yes because it didn't know it's a classic it's a classic example of I have to go all in on one format and also that's something that the early video stores had to deal with like imagine your mom and pop this side of this it's like when we used to go to Babbage as a kid and there would be all of the PC games over here and then one little shelf for Apple yeah so I mean I'm sure that one of the things that that
solved that was big chains like blockbuster one chain says we're going all in on on this format that's the format that wins yeah and it's because you sort of hit on it earlier where it's like one of the you know the reasons surely for blockbuster success was just pure inventory and they had the
the means to be able to buy both everything and multiple copies of things whereas mom and pop video stores often just had one copy and then they would have to make the decision of should we get this on VHS and beta max and if I recall both of the local ones the mom and pop ones that I
wouldn't grew up going to they dominantly had VHS they had some beta max but predominantly it was VHS I also want to point out what the economics speaking speaking specifically of the mom and pop version of this here because again this is sort of a golden era of
of mom and pop retail in the sense that what what would you you could get a bank loan throw together 30,000 dollars to buy a bunch of video tapes and then all you need is some space and a strip mall and so the by 1985 there were about 15,000
individual video rental stores in the United States because any town of any size essentially could support one that's a great entrepreneurial thing if you're in if you're in the movies at all like why would you not set that up that sounds great the so even as I'm saying
comparatively the uptake of the VCR is slow ish the uptake of video rental is not because if you decide to go in on home video this is the main thing that you're going to do with it is start you know having movie nights at home it's helped by prices coming down the first VCR cost $1,400 in 1975 by 1985 the average price was down to $200 to $400 it's not just mom and pops I don't know if you remember this but in the same way that in the 80s everything had
an arcade console maybe in the back yeah gas stations nail salons anybody could buy a few let's say you only have 50 of the same price but you know in the back of your quick you know convenience store whenever you just throw some some rentals in there what were to bring it to blockbuster this is just a classic case then of there's a bunch of individual entrepreneurs creating these these rental firms and what's the play for
capital to do is like let's roll these up and start chains blockbuster was actually late to this game because West Coast video was founded in 1983 and in Philadelphia even though it's West Coast video so that was the maybe
the first to start rolling up individual stores and turning them into chains Hollywood video was established in 1988 in Portland Oregon movie gallery 1985 in Alabama I don't have what was your flicks I don't see flicks at their peak they may have had two two stores but I think they was mostly one
blockbuster video was founded in Dallas Texas in 1985 by an entrepreneur by David Cook his first store had an inventory of 8,000 VHS and 2000 beta max tapes so it seems like he was going for I want to have scale and more inventory than normal from the very beginning and then this gets
put on steroids by a true master of capital hit me with rabbit hole number three the trash hauling business pointed the way to the rapid expansion of blockbuster in 1987 waste management co-founder Wayne Heizenga who originally had reservations about entering the video rental
industry read to acquire several blockbuster stores at the time there were 19 and he brings on associates from waste management waste management is thought of as the biggest name and trash hauling and things like that but again that was a hugely fragmented local town by town industry
that waste management becomes waste management by essentially rolling up individual entrepreneurs and businesses so Heizenga and his associates from waste management basically take the rock model initially of franchising the the blockbuster that I worked for I'm not going to
mention the gentleman's name but the the story I had heard is he was friends with Heizenga and he cut a deal so that there was a territory everything south of Tampa and over to Miami in southwest Florida was his that he had the exclusive right to the franchise and so the blockbuster
I worked for was never corporate he had the entrepreneur in question had cut this deal with Heizenga to have this this territory so they're franchising and a lot of those franchises gets bought up and rolled into corporate eventually but they're just going around buying other chains and did you say
that flicks eventually got bought by somebody or not that's a good question I actually don't don't recall they were still they they managed to survive you know the infiltration of blockbuster for a while years and years I believe they're eventually wound down they may have been acquired you know
in the assets went somewhere but as far as I know they sort of wound down operations eventually all right so I'm going to bring my first hand knowledge of the business model of a blockbuster in Fort Myers Florida in the 90s here's how it works as we mentioned with the earliest video
stores they hit on this sort of membership model there's a reason for that because legally by renting out property that the video store ostensibly owns people sometimes don't bring your property back and so your membership was a way of getting you to sign a contract that essentially I can remember
them every month having the list of people that they were sending to collections because you've had your video your video of again Jurassic Park for two years now and we want that back that's also where the late fees come from though because as we established with the
windowing method if you buy a new movie that comes out let's say it's the Tim Burton Batman in 1989 you're paying hundred two hundred dollars a copy for it you need to rent it out a certain amount of times to break even on your investment and if you cannot get people to bring the movies back you can't turn them over and earn your margins.
So it's interesting how they they dressed up the membership you know they give you a membership card and you feel like you're part of this club as a way to to dress up the fact that they are afraid you're a cheap skate and you need to do all of your accountable for the late fees you know you
would rent it my blockbuster video 1994 video for three dollars and you'd have it for two nights or 72 hours I can't remember that exactly but then if you keep it beyond that time period it's two dollars a day so that can add up to if you're a week late you know you're you're talking about
you're approaching fifteen dollars and so the as much as eventually people made fun of the whole concept of late fees and it was absolutely necessary for the business model of the video store to function for sure I remember at the local flicks that I keep mentioning my mom going back
to her she would as do a great job for us kids of trying to get the inside information about when movies were due back that we wanted to see so she would get friendly with the clerks working at flicks and actually the owners of flicks say like they the so and so batman
or whatever is you know as do back is do back tonight by whatever it was six p.m. so if you come here you know at 601 we should have it and sometimes that would work sometimes it wouldn't though because to your point yeah people would would keep them and flicks obviously at the concept of both late fees and the membership as well. Well and for the people that say well the late fees were their real cash cow that's why they went with it.
We would do weekly calls I was handed a list and I would get on the phone and I would notify you that hey you're five days late on this movie the stores wouldn't do that if it was more lucrative if the late fees were more lucrative plus you can't keep people won't keep coming back if they can never see the movie that they want to see which brings us to another thing that I'm sure you remember.
So a video store would have the new release wall essentially 50% of the inventory real estate in a store is the new release wall and the other 50% is sort of the older movies but 85% of the actual inventory in terms of the cassettes themselves were the new releases.
So Jurassic Park comes out and we would have had what 400 copies of that and then it was always interesting you could just walking down the new release aisle you could see well that movie might not have must not have done that well because it's only two rows of cassettes and things like that. It was entirely tied to the box office performance and what the store thought the rental on that would be.
What this leads to surely you can remember going to the video store to get Jurassic Park and Jurassic Park isn't there you go back the next time still not there. There was a term for which was managed disappointment and isn't it interesting that.
We'll end by talking about the how media now is unlimited selection instant gratification but how much the video stores were able to get away with your entire family gets in the minivan drives to the store where we got popcorn we've got our night planned we just went to Jurassic Park now we're going to come back with that Steve Martin movie where he's a evangelist preacher or something you know.
The back catalog was the compensation it's amazing in retrospect how forgiving we were with the fact that you might have you you probably had decent odds of 50% of the time going to the video store and not getting what you wanted. Yeah and I do wonder how much now that you bring that up that's fascinating to think about like how much of our childhoods of what we actually watched was driven by exactly what you're talking about by the fact that what the first choice was out.
So you know we're basically relying on a recommendation you know maybe from from the store clerk which I'm sure you did a lot of and. And you know some people were were great at that but it's it's still like you were guided in a way and that sort of sets set you on a path to watching certain movies versus other movies.
We're going to end with that because this question of it has the internet killed serendipity is the case I'm going to make but to just again for nostalgia purposes but also for folks that were there I'm going to describe more of like what the video store was I will tell you this working there in high school was great in the sense that everybody showed up the only equipment I can think of is probably working at the movie theater.
But like my junior year of high school on a Friday night Saturday night mg I would have seen you I would have seen your girlfriend I would have seen my you know my my T ball coach everybody would have come through and so yes I did I had brands recommendations and things like that it is weird in retrospect to realize the degree to which you were a quasi local celebrity because people like mg would say hey Brian I really want to get my hands on this can you.
You set it aside yes all sorts of stuff like that but do you remember that as well that like going you know the weekends going to the video store was a thing and it was a social thing it was the entire town coming to one centralized place I do remember that very well I remember that I remember that honestly more so at blockbuster once blockbuster sort of took over because a lot of you know the kids were driving at that point and so yeah you you go with your girlfriend a boyfriend and you'd run into other people that you know I'm going to be a real good guy.
You know you're going to run into other people there and sometimes you know you end up you know leaving together to go watch a movie together because I each other at that place the other funny off shoot of what we talked about earlier the the adult area at the flicks. The people who worked at that store happened to know who was going in or out of the yeah yeah those rooms and so that was often you know sort of relayed back to to the children of what was going on.
I was just getting very clear blockbuster did not have I remember was was it a religious stance or just a general moral stance or something it was a trying to be all things to all people stance okay in fact there were certain movies that the studios would allow to have blockbuster only edits this was probably towards the end of the
year. Yeah. There was no one see 17 to if I would not do NC 17. I remember like the square say these passion of the Christ was not allowed to be rented at blockbuster. It's like that. So it was I don't think it was like a moral religious stance it was we don't want to piss anybody off and we want to be seen as the friendly the
the face for the whole family can go so here's how it works again to just put you back there. A lot of stores had slot outside that you would drop the movies off that you're returning but then also you can come into the store and and drop them at the counter where Brian and his co-workers will immediately open it up see if it's been rewound and if not put it
into the rewinder machine. I was going to ask you the rewind thing I remember you know please cut be kind rewind joke now but the earlier video stores would actually find us as well if we didn't rewind. Yeah. Yeah. Yeah. Maybe maybe maybe because the automatic rewinder was a late technology. So Brian at the counter sorts it out and initially what you do is you put them on the counter the movies that have been returned because the
eagle eyes that are waiting there to get the hot. Yeah. He will I'm going to grab it there otherwise what Brian does it take a huge stack of them and walk around and put them back on the new release wall and people would follow you you know half the time to see what you were dropping off to see what they missed and you're like the
high-piper there was also at the at the front counter you know tons of candy bonus boxes lot of AOL DVDs do you remember like towards the end of the 90s and in the early 2000s like blockbuster became a place where you you know you there be a sample of a new fragrance in there or something like that because again right this would be this is a place where large majority of North Americans
visited on a regular monthly if not weekly basis. It's funny you say that now you're jogging my memory I remember one of the reasons actually flicks which you know I've it seems like this is sponsored by flicks but I swear they're they're not even in existence anymore so it doesn't matter but one of the reasons why I think it actually did well for so long against you know the menacing blockbuster was they also had a very fresh popcorn they had a
popcorn machine like an old school one that they would make popcorn and put it in these great big giant tie bags that they would give to you with with every rental and so that alone like blockbuster obviously had popcorn as well but it was if I remember right they
would only sell the microwaveable bags right yeah that would then you know you take home I have to correct you some blockbuster stores did do the thing of having a popcorn machine in there and would pop it just for the smell yeah that makes sense yeah the public also yeah trigger for rental I want to make room for you could rent video games at the last years as well I assume that was a big part of of your world as well not only that but game consoles as a household that was never
allowed to have our own Nintendo we experienced Nintendo by going to other people's houses towards the tail end of high school we were allowed to rent I remember renting the PlayStation one when it came out the n64 when it came out and you pay whatever you know 20 bucks to have it for a weekend and then you would rent the games to go along with it too so that's how I had a lot of video game experiences in the 90s is is renting the actual consoles in the games.
Yes that was a big that was a big thing when I was growing up because video games even after the price of individual movies to buy came down video games still cost 50 dollars you know in as a teenager you didn't necessarily have that money and and the video game is a weird thing because unlike a movie where it's you know two hours long video game you know can last you hours and hours on end but you don't know if it's any good right
writing review magazine maybe rental renting a video game is something that we it I guess a lot of games give you free you know try this level and that sort of thing but the ability to really kick the tires on a game before being like you know what that is worth 50 bucks that was that was a huge huge thing.
Yeah let me end by pointing out that as best I could find the four blockbuster the late fees were only ever 16% of revenue now at its height that is 800 million dollars a year which is not nothing they made blockbusters reportedly made more money in merchandise sales in selling you know posters and the popcorn and the candy then they did from the late fees
I just have this I don't know why this is important to me but the idea that the the late fee was such a stupid thing that why didn't they why did they hold on to it for so long I don't think that was the case really it was it was just something that served a person and that's
earned money that's super interesting but you also understand it's like you know it's a penalty right and you feel like yeah people are you're penalizing your customer you already have managed dissatisfaction which is half the time you might not be able to get the movie that you want yes and if you forget to return it you're you're paying literal fines they called them fines yeah yeah okay hit me with rabbit hole number four
it was the coming of the DVD that screwed blockbuster this is the case I'm going to make and this is the real innovators dilemma because what I'm going to describe is I think there was a window in time where the DVD being a new technology because it was adopted first by Netflix that gives them their wedge for a key few years where it was important so by the 90s blockbuster is a multi-billion dollar company
He's in the notably was worried about how new technology could threaten the business long term he's thinking at the time just the growth of cable but also everyone can see video on demand will come eventually and so this is why
he's going to cash his out he tried to do things like maybe tie it to a cable company there was also the idea of a blockbuster themed sports and amusement park in Florida he eventually throws up his hands and sells blockbuster to Viacom in 1994 for 8.4 billion it's complicated but later in the 90s blockbuster is spunk out also goes public some their redstone this was one of his big purchases along with MTV that makes Viacom into the conglomerate that we remember from that right time
because he started owning movie theaters with national musmots which is in the news all over again now exactly that ownership of paramount but yeah that's right he also is the one that you know because he is creating a media conglomerate he goes to Hollywood and says listen the way we're going to do it now is we're going to do a straight revenue share no longer we're going to pay the $200 and then try to make it back
blockbuster obtained videos for a little above cost after redstone takes over and blockbuster keeps 60% of the rental fees and the studios keep 40% and that makes sense because that is it's not exactly the same as as theatrical distribution but it's more similar to that right and so he knew that business obviously being in that world and so yeah that makes sense why he would try to strike that new deal
but the reason that I say that the DVD is the thing that upsets blockbuster's apple card especially is because they had the experience in years prior of the laser disc right obviously you remember the laser disc the laser disc was a section one friend who had who had a laser display this was the problem so the laser disc predated the DVD but it was the size of an old
like a giant dinner plate yeah old LP was yeah it's pretty close to the size of a record player record it had was digital so the idea is you have better picture and stuff like that but the compression technology was such that even on these huge laser displays to get through a full movie would have to flip it over like a record remember that and the fingerprint problem on those things
people remember it I'm sure from CDs music CDs when you would get smudges on it and you have to wipe it off imagine that on a record sized CD effectively and having to flip it over so you're like handling it well this this brings me back to Babbage's and the PC wall versus the Mac game wall do you remember in video stores there would be a tiny little corner that they were like
the laser disc never took off except for the weirdos that went all in on the technology and so you were shunted off into this corner probably next to the porn corner yes where they had a few of them yes totally a few laser discs and so this was this was a technology that was recent enough that the video rental industry had experimented with and had burn them and was not a success
that they were gun shy about this new technology OK DVDs are smaller but what's the difference you know we already proven that people don't care enough about having a better visual quality to make it worth what they I guess didn't figure on was the rise of you know flat screen and HD TVs and things like that where having a better picture actually yes something you can do exactly right and I would just add one other thing that they you know may have come into play I also remember you know maybe
there was a little bit earlier but around the same time they were also and I think it was Sony was trying to hype up mini discs for music and that was another new format like it was a did as a tiny disc inside of like a floppy disc almost to play music and and that didn't end up taking off as well so I'm sure yeah the powers that be look at these different technologies that these
companies are trying to hype and and pass you know a new technology so you can see can earn all sorts of money selling these things again and just being like nah second work.
So DVDs start to become available in 1997 also in 1997 on Antiocho becomes the CEO of Blockbuster he was formerly the president of Taco Bell also that your Warner Brothers offers a blockbuster Antiocho a new rental deal for DVDs exclusively blockbuster was going to have the exclusive rights to rent new DVD releases for a period of time oh Xing out there competitors but also this is the only place that you can see it at all before it goes on sale to the general public.
The studio was going to receive 40% of the rental revenues and return again which was the same deal already in place for VHS. So it seems like a good deal blockbuster completely turns it down so I'm roughly actually an important thing here is the studios respond by lowering their DVD wholesale prices because since they're they're sort of boxed out of the biggest player in the rental market.
They say screw it and they make a deal with Walmart and other retailers to say all right let's go ahead and since they didn't take the bait on setting up this rental scheme. Let's just sell them for 20 bucks and places like Walmart and and and Best Buy and Circuit City when they were still healthy they jumped on this and this is where we get what you and I remember the big box retailer.
Like Best Buy for DVDs at the front for 20 bucks is sort of the loss leader to get you in the store and maybe buy a TV. This is this is the world that I knew very well because I was the first person that I knew to buy a DVD player and I bought it because of that right like all of a sudden you can get access to movies for 20 bucks instead of the world we were talking about where it's 100 plus dollars to buy VHS.
I was in my late teens at that point and so I was very into movies I was going you know usually once a week if not multiple times a week to theaters to go see a movie and I remember very distinctly having I bought a DVD player which also wasn't that expensive relatively speaking.
I want to say it was it was like 150 to 200 dollars which you know a lot when you're a teenager but it wasn't thousands of dollars and again the the movies themselves I remember buying out of sight as one of the first ones at George Union General open movie and it was just great you could have these great new movies on DVD.
So I have to underline they could have had the rental regime of the VHS era continued at least for a period of time and they turn it down and they turn it down in 1997 and in 1997 there is a startup called Netflix which is formed. Rabbit hole number five is the legend of the late fee leading to the founding of Netflix is mostly apocryphal.
Netflix was actually founded by a dude named Mark Randolph he he came out with a book a couple years ago that was his autobiography about this he was in Silicon Valley working for a startup called pure Altria which was founded by a gentleman named Reed Hastings.
Randolph and some others I think pure Altria got acquired or something so people have golden parachutes and something so Randolph and some others from pure Altria go off and it's 1997 the internet is happening the internet bubble is happening and there was in the same way that big box stores in the 90s where well you could have a big box store for home furnishings and that's bad bath and beyond and for electronics that the idea of there's a big box.
Retailer for each individual niche of of retail essentially before everyone realize that Amazon was going to literally be the everything store there was this movement to well what worked for big box stores should work for websites as well which is why you had
infamously pets dot com and all sorts of things like that Netflix is formed as a sort of we're going to do Amazon if Amazon's only doing books will do movies there is a well funded competitor called real dot com which had a bunch of you see money and might have had a big IPO pop I can't remember the details on that.
But what Netflix realizes is the new technology that is on the up that you can't really get anywhere is the DVD Netflix dot com goes live on April 14, 1998 at that point DVD players are starting to sell faster than VCRs. 400,000 units of DVD players were sold in the six months after their release in 1997 he see ours are still selling at 13 million a year.
But on a sort of quarter by quarter basis the uptake of the DVD is starting to happen Netflix jumps opportunistically at this sort of new technology as a way to differentiate itself initially they ran a VHS tapes as well or tried to but they were kind of at first a little bit of a spoke sort of like by it or rent it thing in the same way that you buy books from Amazon you you try to buy movies from real dot com or Netflix.
But again blockbuster Hollywood video for the entirety of 1998 still aren't renting DVDs so Netflix deciding to start to offer these as rentals kind of has the market to itself then as you're stating the DVD players are relatively inexpensive and so it's the chicken in an egg problem if I buy this.
What can I do with it Netflix starts early on hey here's a coupon inside the box for your new DVD player this is what you do with your new DVD player because again you can't go to blockbuster to rent DVDs for your brand new DVD player in the first four months that they offer rentals Netflix sends out and gets back 20,000 DVDs they hit on the subscription model.
Keep it as long as you want no late fees but I'm going to come back to that in a second because even that was sort of late in the in the in the in the timeline they they introduce things like keeping track of what you want to watch you know the Netflix queue they're trying to replicate the IRL experience of a video store with recommendations.
Read Hastings does not join Netflix full time till 1999 this is the tail end of the dot com bubble bursting Hollywood video buys real dot com for a hundred million dollars. Hastings one of his first acts offers Netflix first to Hollywood video the idea is hey we have this DVD inventory that we've built out you're going to have to transition to DVD anyway we've got all the DVDs essentially the play is let us this is a quick and easy way to do it.
This is a quick and dirty way for you to build up your DVD inventory right and Hollywood video turns them down by the end of 1999 there are four million DVD players sold in North America so that this is starting to become a sizeable market rabbit hole number six as I mentioned.
So they are found in 1997 they go live on the web April of 1998 and it is not until the tail end of 1999 that the thing that Netflix becomes most famous for at least in marketing the no late fees thing isn't introduced till the tail end of that year.
So they are not only a medium success sign ups for Netflix go up 300% in the first three months that they offer the no late fees thing if they had only done 20,000 DVDs mailed out and gotten back in the first four months they were shipping a hundred thousand this a week for the first time after introducing no late fees.
I was pretty early signing up for Netflix because I was mentioned I was that that person with the DVD player I don't remember exactly the year it was but I do recall very distinctly you know not even the late fee thing was interesting but it's more that you couldn't even take out a new movie until you sent the other one back right you would get three at a time I think was was the play and so you could send one back and then you get a new one and then you send one back and then you get another one and that was right that's like a genius way to handle the no late fee thing.
And this that is a classic innovators dilemma thing because well why doesn't blockbuster just do something similar which eventually they do pay us a monthly fee and you can keep them but there's two things that I think people should keep in mind is the video store was kind of the only sort of retailer.
I mean obviously Costco did this as well and Sam's Club but the idea that you had a membership and you had to jump through hoops to actually even use the product then if you I don't think that subscriptions as a product were something that was that the American public was entirely comfortable with maybe you subscribe to the newspaper or a magazine but I remember there was there was almost this weird situation that that sort of was indirectly tied to Netflix because you remember Columbia House and there was CD.
Send in a penny but then pay them and get them and it was all just a bait and switch to then pay a giant fee ongoing fee. I think it cannot be underestimated the degree to which in the internet era Netflix got people comfortable with subscriptions as a product for sure for sure I think that's true.
So as I mentioned it's interesting that one of the first things that when read Hasing's joins is he's like I want to sell I want to get out probably a smart move seeing the you know dot com bubble having maybe but he tries it again he offers to sell to blockbuster same with Hollywood video he says look will help you make the DVD transitions boom instant inventory also hey keep doing what you're doing and we'll keep doing what we're doing but we'll have access to your stores there could be synergies here he offers to sell for 50 million dollars.
Blockbuster turns them down flat why well let's look at blockbuster at this point they IPO as I said in 1999 and so they they spin out again and make a bunch of cash and they have 6500 stores worldwide at this point at the same time in April of 2000.
Netflix only has 120 thousand subscribers they do revenue of only 5 million dollars on losses of 30 million dollars so also there's not necessarily proof yet that the unit economics of this workout that charging a monthly fee will make up for the amount of money that you have to spend to acquire the inventory Netflix has expected losses of 57 million dollars in the year 2000 now they've only raised 100 million dollars in venture capital.
The dot com bubble is coming again I think I can see why read was looking to shop this around it makes a ton of sets.
Yep and potentially why blockbuster doesn't want to take that on like taking on a business that is bleeding money I see I see this all the time there were there is a period of time after the bubble burst were so many companies were almost you could hear them sigh with relief that boy that internet fat is over thank God back to businesses as usual you know but I also I'm not saying that this is also a big deal.
But this is also a powerful but the idea that well we named it Netflix because we knew eventually we were going to do video streaming on the one hand everybody knew that video on demand was eventually going to be a thing including blockbuster at the same time if they really were going to push through this you know long term plan they maybe wouldn't have tried to sell. What year did they launch blockbuster online competitor. It is in my notes we will get to 2007 is blockbuster total.
Let me do the timeline hit me with rabbit hole fact number seven because this is timely and interesting and Ron is involved. So blockbuster as I said is aware that video on demand is coming could be a thing and Ron if you'll remember one of the things that caused them to blow up is they got into the fiber business people might not remember the dot com bubble was not just about the dot com's the
pets dot com and the e-tailers that blow up there's also a bubble infrastructure and infrastructure and Ron is ostensibly in the energy business so if you can treat infrastructure as a marketplace where you can you know sell futures contracts like that's what and the agreement with and Ron to create to build out this video on demand product was supposed to last for 20 years. So for the service and Ron of course filed for bankruptcy that year.
So I'm pointing that data of December of 2004 as late as that they're still almost doubling down on the the existing market for this where you have real estate footprint you have employees you have actual inventory on shelves and things like that. But they are renting DVDs at that point not yet.
Wow. Okay. In 2003 Netflix passes one million subscribers for the first time three years later they will pass five million subscribers for the first time so keep those years in your head 2003 Netflix passes a million 2006 passes five million at the peak that but I believe the absolute peak for blockbuster was 2004 in terms of revenue and stores they had more than 9000 stores worldwide in 2004.
There consultants the McKinsey's who are always so brilliant of studies that tell Netflix or tell blockbuster that Netflix will never be a major threat Netflix is by 2006 when they hit five million subscribers but remember they were founded in 2007 so it's almost a full decade where Netflix is been 1997 1997 yes sorry Netflix is like this little net or this yappy dog biting a blockbuster but blockbuster is absolutely at its peak in terms of revenue.
It's peak in terms of earning money in terms of footprint in terms of clout in the industry so they still feel like you know maybe this subscription thing is a thing but we you know what we missed real quick MG is also the fact that the DVDs were so thin right I don't think you could have done VHS cassettes by mail you could
have it would have been more expensive but the fact that for sure the actual physical form factor of the media was an important thing here right in the whole marketing angle of the red envelope right like they didn't
have to do the same thing with the netflix the genius job you know however that that came about to just be synonymous with the delivery mechanism literal delivery mechanism of the of the for okay here's the answer to your question lockbuster buys something called DVD rental central for one million dollars this is their first for a into what would become blockbuster online it doesn't
have been in the year 2004 Netflix formed in 1997 has a website 1998 it is not until 2004 that blockbuster at an meaningful way tries to match at least the online component of this 2005 they start to experiment blockbuster with a no late fees policy they're trying to ride the fence and a sort of weird hybrid way you can also it's
convenient to just return things by mail by putting in an envelope but also you can return them to the store as well to so really you want you want to go with us because we're the best of both worlds yeah I think that that's you know it's kind of confusing in terms of there's also there were certain stores that weren't corporate blockbuster stores so they couldn't do those deals I actually remember that really well because I did for a while sign up for blockbusters online DVD
subscription because I live so close to one and so the timetable for me to turn around like it was mostly it wasn't even movies at the time I was living alone I think in Los Angeles and I was churning through television shows like I remember like 24 and shows like that where you know they would have like the whole season on like four or five different DVDs so if you're using Netflix which was only by mail is your noting you know you have to wait two days or whatever for for the turnaround time
whereas if you went to blockbuster they had a deal where you could drop it off there and pick up a new one you know right away their initial for a is called blockbuster online and through that customers could rent a DVD online and receive a new movie for free when they either send it back or return it to a blockbuster store
this was successful to a degree but apparently it cost blockbuster every two dollars every time they did this so essentially they've been forced into breaking up their business model
and so that's one of the reasons I read it a piece that said when they start to experiment with this Carl icon intervened in the activist way to stop them from doing this because it was losing them so much money they're they're last for a throwing in the towel in terms of competing with what Netflix is doing comes in 2007 with blockbuster total access which is probably what you were just describing I think that's right yes
it's basically just Netflix you're paying us a fee but there's also a store you can go to if you want which is kind of the worst of all worlds in a way and you're exactly right that again I did it because I happen to live like a block away from one so super convenient but there's no way it would have made economic sense compared to what you know the model that that blockbuster had before because yeah you could it was almost like movie pass in a way right like where just like oh yeah
you can see as many movies as you want just please don't do that because if you do that we're going to go out of business and say right the blockbuster sort of stumbled into that on the way out the door hit a rabbit hole number eight blockbuster did kill HD DVD as alluded to just like with VHS versus beta max there was the HD DVD versus just the DVD format there was two competing formats right blockbuster on the way out the door kills the HD DVD format
HD DVD format because they go with Blu-ray versus I'm sorry I said VHS DVD before yes but this is into the Blu-ray versus HD DVD era so on the way out the door they settle that format war because they still have enough scale at the time when they say hey listen we're not buying HD DVD anymore we're going all
in on Blu-ray that's enough to have Blu-ray win yeah it was sort of wild like after the whole beta max and VHS thing the same thing happened you know with all these studios trying to align behind one or the other because it's one of those classic tales of there were the corporations made so much money on the licensing fees of the VHS technology for like that was a Harvard business school like this is pounded into your head like you know if you can
create a technology right because for the next 30 years you'll get a dollar for every unit that is sold or something right right I can see why they tried to do it multiple times because if you win it's a license to print money all right to bring this to a conclusion but bring us back to our type our timeline here across our total access launches in 2007 do you know what else launched in 2007 hit me I don't remember the very first Netflix streaming product which is an experience
well not I'm not saying that they had their own content yet I'm saying the product itself where Netflix had always been hey send the DVDs back to us via mail that's first product that they roll out and say hey dream this was in 2007 the same time that black busser is trying to basically go all in on the Netflix model of subscriptions and and mail it back that's when they jump to streaming their first
classic one step ahead yeah one step ahead blockbuster tries to copy this they acquire something called movie link for 6.6 million and they try to cut deals with the movie studios they initially have the bigger library of over 6,000 films but Netflix follows the playbook that got them into all of the DVD boxes that when you would buy a new DVD player do you remember when you got your first flat screen TV in the late
months early teens one of the things that would be in there would be again hey when you plug your smart TV and make sure that you download the Netflix app because that's what you can do with this brand new TV that you got that makes sense and that reminds me you know this is a different rabbit hole that we won't have time to go down but there was a whole story of like
who rose out of Netflix right it was like correct correct project that was their hardware side yeah their hardware streaming video that eventually was too early right for where where it was at the time and so it spun out but now it all comes back around and now Roku has I think what is the most popular streaming box even in the world of Apple and Amazon and it's all built into the TV to whereas Netflix the content company has always sort of been the will be the app in your
App Store or on your home screen sort of model those watching on the YouTube version of this you're going to see some charty classic chart goodness that shows that in 2008 Buster is still doing five billion dollars in revenue Netflix in 2008 is still doing less than two billion dollars in revenue as late as
2008 it is blockbuster still ahead by metrics that maybe most people would think mattered it wasn't until 2010 into 2011 that Netflix passes blockbuster in revenue for the first time it's not until 2010 that's crazy that that's like the famous example of even after the iPhone launched in also in 2007 Blackberry was doing well and went to new records right right to all time new highs in terms of sales and revenue if you bought for a few years afterwards
Blackberry shares on the day the iPhone comes out you still could have like four or five extra money as long as you got out at the right time exactly yeah so the when they introduce the Netflix passes blockbuster in revenue at the three billion dollar mark if you're seeing the chart on Netflix you're seeing Netflix's revenue go hockey stick up
and the precipitous decline in blockbuster is almost it's almost a mere a mere image now what's also happening at this point is the great financial crisis in in 2008 so I think that slightly Netflix benefited from that because it was a cost cutting measure as well I would love to know the internal numbers in terms of did people take up Netflix to save money in the financial crisis because well we have to pay $10
versus the 30 also I assume that blockbusters giant store footprint just became a giant albatross around their neck of having like 1000 whatever stores you said same thing happened with a came art as came art was bought to try to be a real estate play but that didn't work out around the same time so the inflection point is the three billion dollar mark in around 2010 when Netflix becomes bigger than blockbuster
guess what also is introduced for the first time in 2010 that I assume is the original streaming stuff streaming only plan streaming was originally when they're experimenting with it sort of an add on hey you already have a Netflix membership so if you put this on your TV there's a certain amount of movies that also gratis for your membership you can also stream on your smart TV they move in 2010 to the streaming only plan at the exact point that blockbuster goes into freefall
at the beginning of 2010 blockbuster had over 6500 stores still of which 4000 were in the US that number fell to 3,400 by late October that same year and they try all sorts of experiments they try to buy circuit city as circuit city goes out of business oh wow they try blockbuster express video rental kiosks so like red box red box exact model yeah it's in august of 2010 that blockbuster files for bankruptcy for the first time we don't have to go into all of the various
machinations because people try to say blockbuster even as a brand acquires at at some point k telecom wanted to buy it at some point by November 2013 there were only 300 remaining corporate owned blockbuster stores in the US as a cost cutting measure they shut down the DVD by mail program that year as of 2014 there were only 51 franchise locations still operating in the US in 2014 by 2018 they're down to nine stores
the very last one was in bend Oregon and I think is still functioning but mostly as a tourist destination I think that's right I think I saw something but it relatively recently I think I was going to go buy shirts like this but at one time or another more than 43 million US households had blockbuster memberships sort of what's the number on prime today something like 80% of American households or something like that
maybe not 80% but maybe approaching half at some point depending on when you count the numbers so this is why I think we're doing shows like this people remember this like this was something that was for a brief window of time absolutely central to American middle class household life
it was the right of passage to get a blockbuster membership card you're on like car exactly yeah yeah so the obvious sort of spitballing here is could blockbuster have ever survived I'm gonna let you answer first and then I'll tell you what I think so I do think you know for all the the ragging on blockbuster and rightfully so like and you sort of hit on this at the very end there
it did have a great name it has a great name and a great brand right like everyone remembers the yellow and blue the icon and again a great name and Netflix also has a great name but it feels like there's a world in which those two could have been you know potential
Yin and Yang foils to one another feels from a branding perspective if nothing else if they had made the right strategic decisions but you know what I would have to say if I were just trying to extrapolate out everything that happened
and the way that it would play out most of the time I mean it's it's not exactly a hundred percent classic innovators to let him out but it's not too dissimilar from yeah just what what the high level notions are there because they were directly incentivized not to do what Netflix was doing and then to the point that we made earlier when they started doing what Netflix was doing it really ruined their business and so that's what happens I think Netflix wins because of two accidents of history
the first one we have already discussed they had this window of time when DVD is a technology is on the up and they have the they have almost the DVD market to themselves but the second thing is that when if let's say that blockbuster says you know what we're getting killed here with these DVD rental things instead of spending years trying to solve that problem
let's like you said jump ahead and let's go ahead and go into streaming before Netflix or somebody else does they would have to be antagonistic to Hollywood in in the way that that Netflix was because they would have to if you put out blockbuster dot com and you're you're streaming from this studio and that studio or whatever you have to cut deals and those deals would be cutting into the profits that they're already trying to cut out
and cutting into the profits that they're already trying to make from you from physical rental or yes and long term as we've seen every studio is going to want to own this why are they going to want a middleman called blockbuster dot com yes to rent their movies two offshoots of that that I think are interesting one is that so much of it is dependent on timing is so much of the world is right like it's like Netflix really lucked out in that they were able to ride the DVD
the first DVDs the fact that we talked about earlier that DVDs were much more accessible via mail and so their mechanism of delivery was like perfect timing with the rise of the DVD and then basically made the exact right call on the timing to move into streaming when broadband was fast enough to be able to do that
we didn't even talk about the fact that they had quickster and they tried to spin and that was a total disaster and a bad strategic move but they were able to survive that because of their great timing and because they they made other smart decisions beyond that one which almost do them the company at one point
but also another big accident of history and window that Netflix took advantage of was the fact that they weren't blockbuster in the way that why after Napster did the music studios cut a deal with Steve Jobs for iTunes is because they were assuming it's only going to be on max which is a small percentage of the market so we'll be willing to oh this is just extra money for us when it's Netflix that goes to Hollywood and says hey can we have some of your old movies that you haven't monetized in a while will you
do sweetheart deals and this is just foul money for the never have been able to do that never been able to do that so they by being the little guy by being sort of like the Albanian army they they were able to get a wedge at a perfect period of in time when that mattered I think yes and one other thing that your point reminded me of is talking through it it's sort of like in a way it reminds me of what many of the media companies but Disney in particular has to do it
right now with the you know the the demise of cable right where it's like they're trying to figure out how to move everything over to streaming and obviously they've done a pretty good job with that with Disney plus but at the same time a huge part of their business and a huge part of their profits are still residing on cable television and affiliate fees and ESPN in particular is now you know the forefront of that because of the sports rights and how how lucrative and expensive those are and so their Disney has had to do this thing where they're like going to the market and they're going to be like the
thing where they're like grinding out over years very slowly moving everything the sports capacity online to the point where I think it's next fall they're finally saying they're going to move to ESPN fully streaming but it's been so long in the making and it's to your exact point like they know what they need to do and they have the technology to do it but they can't piss off their partners in the same way that that blockbuster had they tried to do some of these moves it just
would have been a non starter and it would have taken years and years and while Disney does have competition they also have the strength of IP they're able to ride their theme parks you know they have other businesses that are that are allow them to leverage those revenues and profits to allow them to give them time to basically do this blockbuster had none of that of course right right and also
this poor management I didn't go into much detail about that but yeah let's end with this which is the we we mentioned it briefly at the beginning the way media works now and sort of what the internet gave us or at least the digital delivery of media gave us is infinite selection instinct gratification I remember the first time I've said this before I came to New York City the thing I wanted to do the most was go to
the market because I knew I could find albums that I couldn't buy it my local record store we look it's it's in say if I said to you right now M G there's a new TV show or did you see that movie and you couldn't immediately check it out yourself you you think it was insane right and we talked about how blockbuster was a business built on managed dissatisfaction but in a way that's what media always was because with
you know if you don't see the godfather in the theater you might never get a chance again in your lifetime media was always like that but that made it more precious because what is managed dissatisfaction another word for it is serendipity you said how many movies did I fall in love with because I went to blockbuster or the video store because I wanted to rent
something and I didn't get it and so I got my second choice and that movie became a you know Bill Simmons and the rewatchables is predicated on the idea of if if something plays on cable enough even if it did terrible at the box office it can get a second life yep so have we lost something in the current model of how we get media and is that something called serendipity I absolutely think that we have I think about this a lot or I have historically thought about this
just in the music side right where it's like I just remember so distinctly when I was a teenager it like you just talked about going to tower records just going to any music store to find I was very into Pearl Jam which I still I'm going to see them soon to our I was so into just finding bootlegs right and going to these stores that had specific ones because they weren't mass produced and they were literal bootlegs and so you would find them in certain
stores and it would be like the greatest treasure hunt in the in the world when you're that age and because you could only you know find certain media that way and only afford you know for a $20 CD you could only afford a few of them every so often you would just listen to them nonstop right and it's the same idea though with with what you're talking about
serendipity and and movies and TV shows it's basically now when you have access to everything the problem of abundance and you know sort of the problem of the paradox of choice at that point of like what do I watch and even to this day like last night my wife and I are deciding what we should watch and it's like we could pick literally anything and so would you pick and so of course like it sort of goes back to the
notion of recommendations from people you trust which is which is nice but you're still you know missing exactly what you're talking about sort of those the second order effects of not something not being available because everything is always available and so you're not going to just have this like random choice unless you happen to sort of stumble upon it on like well I would say that online and you click on a link and you start watching some right the counter
argument would be that's what social media functions as is the discovery mechanism for new artists especially in music right so you could say that there's still serendipity there but I think also more important than the well I just stumbled on this movie that I didn't know I would like it became my favorite movie is what you said remembering being in college and I can afford one new CD a week one new album a
week and so if I wait that long and saved up that money I'm going to listen to that album absolutely even bands that I love a new album comes out I go check it out on streaming I play it once or twice and I don't allow myself the luxury yes of falling in love with it because
for just go back to something else that I know is immediate gratification and as a yes and you brought up yet the bill Simmons the rewatchable point of like that's that's just totally gone it feels like for the most part because even with music you know it's a shorter time duration things so you might put in some time to listen to something and you can do other things while you're doing it with a movie or show you know if you're not paying attention you're just going to miss
something and so yeah there used to be movies that came on cable when we were watching and because we only had you know whatever 10 20 channels even even in the cable days you would watch something because it was on and you're just not going to do that anymore and so that is that is totally gone in a way that's that's a little bit
sad because yeah I just are you know the younger generations will never be able to fall in love with something that's not served up to them you know in a much more projected way that's that's being sent by something rather than it's just being total serendipity so I think that's probably a good philosophical note to end on thank you MG for for getting nostalgic on blockbuster with me is there anything that you want to plug or at least tell people where to find you and you're writing online.
Yeah so I'm mainly writing these days at a site called spyglass spyglass.org is where I where I set up shop and have been writing for several months trying to get back into that habit and write a lot about you know sort of the stuff we're talking about so hopefully people enjoy that but yeah it was great chatting with you Brian great going down this nostalgic trip I had not
thought about flicks in a long time I feel like that's that's now I'm going to go tell tell my one of my daughters about that because I think she'll get a kick out of the idea that there used to be these giant video tapes that you would have to bring home to watch a movie. A quick reminder for me that I do a daily tech news podcast called the tech meme right home approaching 2000 episodes of that now 15 minute news round up every day search tech meme right home and give that a try but
thank you for joining us for this episode of rad the 80s 90s history podcast if you are watching this on YouTube hit subscribe and like all that stuff if you are on Spotify Apple podcast follow whatever it is on your favorite podcast app that you do to make sure that you get every new episode that we release these 90s history on YouTube 80s 90s history on Spotify all the socials as always yo homes smell you later. you