The Death of Blockbuster

last episode. Blockbuster had grown from a modest video rental operation in the mid nineteen eighties into the dominant company in the home video rental industry a decade later, but a slowing market and some questionable accounting strategies had put the brakes on the meteoric growth the company had been enjoying in the late nineteen eighties. In September nineteen Wayne Wazingo, head of Blockbuster, announced a planned merger agreement between Blockbuster

and the media company Viacom. The proposed merger would be a four point seven billion dollar deal, but there was a problem. Viacom was already engaged in another big acquisition effort at that time. The company was in a little bit of a bidding war with QVC in order to try and purchase Paramount Communications. Viacom's talks with Blockbuster were kind of put on hold while that battle was raging. Ultimately, Viacom won the bidding war and it bought Paramount, with

Blockbuster investing in Viacom to help fund that acquisition. But both Viacom and Blockbuster were suffering in the stock market after this bidding war. The value of both companies took a hit. By the time Viacom was finally ready to move forward with the Blockbuster acquisition, in that four point seven billion dollar proposed deal had ballooned up to eight point four billion with Zinga said CIA shortly after the deal was over, and then pursued his hobby of buying

Florida professional sports teams. Seriously. He was an owner of the Miami Dolphins, the Florida Panthers, and the Florida Marlins. He actually was the guy who brought the Marlins and the Panthers teams into existence. He would go on to found a little company called Auto Nation that kind of followed the Blockbuster model, but you know, with car sales instead of video rentals and Huazinga was a billionaire. He passed away earlier this year, on March two thousand eighteen.

All right back to Blockbuster, the company that whizzing A left, Viacom's Blockbuster was well, it was a mess. The company was already starting to teeter after the incredibly aggressive expansion strategy that was Zinga had initiated, and Viacom was having problems finding someone who could take the helm and be

an effective leader of the company. Now this is not necessarily to cast shade on the CEOs who would inhabit the position of head of Blockbuster from the fall of nineteen into the spring of n but rather put into perspective the kind of trouble the company was in. It was getting really tough out there in the market. Blockbuster had grown super fast through opening lots of stores and tons of acquisitions. The video rental industry just wasn't as lucrative in nine as it had been in the mid eighties.

Videotape prices had started to come down considerably, which led to a lot of home theater enthusiasts going away for rentals and just buying movies outright for their home libraries. I mean, why would you spend five dollars to rent a movie for three nights when you can own one forever for a bit more, sometimes quite a bit more. But people were starting to say I'm just gonna buy

movies instead of rent them. In addition to decreased consumer demand, Blockbuster was being leaned on heavily by Viacom during this period. So Viacom's the parent company and it had incurred a huge amount of debt while it was trying to make that acquisition of Paramount, and executives still wanted to buy more companies. Viacom wasn't done acquiring companies, and Blockbuster was really a productive revenue generator, so Blockbuster became a way

of fueling those acquisition efforts. Stephen Barrard became the CEO after Whizinga left in September nine. Initially, he tried to follow wizing as philosophy. He pushed for more expansion, but he also ended up getting caught up in a little bit of a scandal. In February, he was investigated for possible perjury. The matter concerned a lawsuit between former Blockbuster

vice chairman Scott Beck and the company. The District Attorney uh just concluded that there just wasn't sufficient evidence to support the accusation of perjury, and so they did not pursue charges against Berard. But it still was kind of not great pr for Blockbuster, even though ultimately the district attorney said, no, I can't find enough here to warrant going any further. Burrard would actually resign in March nineteen

ninety six. So he had been at a CEO of Blockbuster for about a year and a half and he left the company. Where did he go, Well, he went to go join his buddy Huazinga and his new venture of Auto Nation, and then he actually followed along with some of Wazinga's other ventures. They would go from one company to the next, and he did pretty darn well for himself. Replacing Burrard as CEO would be a guy

named Bill Fields. He had formerly been with Walmart. Fields of strategy was to push for Blockbuster to become an entertainment variety store. He started pushing for Blockbuster to open more stores in smaller markets like rural communities. He saw how Walmart had been a huge success by moving into these rural unit these and you thought Blockbuster could do the same thing. He also began laying off a bunch

of middle management out of corporate headquarters. He he slashed lots of jobs while he was CEO, and that was to both streamline operations and to reduce costs. He began to push for Blockbuster to get more into video sales, not just rentals, and he wanted to take on his former employer Walmart in that regard. Walmart was the dominant

UH merchant for videotaped sales at this stage. And he also wanted Blockbuster to offer other products and services, including the possibility of signing customers up for Internet service with partnered providers who worked with Blockbuster, or for offering up a PC upgrade service, so you would bring your computer in and a PC upgrade business would end up souping up your your system. Fields also had really big plans

to customize the store experience for different regions. He actually said, and this is a quote, New York City will have much more sophisticated products than winder Georgia. Ouch dude, as someone who comes from rural Georgia, ouch New Yorker sophisticated

products in Blockbuster headquarters would relocate again. Now you might remember in the first episode I talked about how Blockbuster started in Dallas, Texas and then moved from Dallas, Texas to Fort Lauderdale, Florida, because that's where Wazinga wanted to set up shop but now waszing his out. So Bill Fields decides to relocate the headquarters again. Now where are they going to move back to Dallas, Texas where it

all started. However, one person would not go along with the company to this new headquarters, and that was drumroll, please, Bill Fields, the CEO, quit his job just thirteen months in that position. Here was this powerhouse of retail with huge plans for a Blockbuster, who now was going to step back. Why was he leaving? He said he wanted to get back to quote general retailing end quote. Now

that caused major concerns in the company. So for one thing, Fields had hired a whole bunch of former Walmart executives to join him at Blockbuster. So the first fear is that while the Fields is leaving, are all of his hires going to leave too? Because that frequently happens if you have an executive come in, that executive ends up hiring his or her buddies or people that they know

from a former company, and then that executive leaves. Frequently the other people will leave to They'll say, well, the whole reason why I came in here was because this person convinced me to, and now that they're gone, there's no reason for me to stay. So that was a

big fear for another fear. According to The Sun Sentinel, thirty three of the forty top executives who are listed in blockbusters annual report that was filed in spring night had left the company by spring of n so nearly all of the top executives of the company had changed out of Blockbuster in just three years. Meanwhile, company financial reports were not in great shape either. The cash flow was down significantly. Viacom's share price had fallen twelve percent.

Remember Viacom was the parent company, and the industrial average for the stock market was actually on the rise, so in general, companies were doing great on the stock market, and even when that was happening, Viacom's share was dropping twelve So Viacom announced it would sell off some of its stock and Blockbuster in order to pay towards Viacom's

twelve billion dollars in debt. The move left many corporate employees confused at the relocation to Dallas because it was Bill Fields who had led that move to relocate the company from Fort Lauderdale back Dallas, Texas, and now he was leaving Blockbuster, but Blockbuster was still going to relocate. Now, not everyone can just pick up and move right. You can't just pick up your entire life and move to an entirely new state. Not a lot of people are

able to do that. In fact, less than thirty percent of all corporate employees at Blockbuster headquarters chose to move with the company. That represents an enormous loss in knowledge and talent. It's a huge setback. People who have dedicated their time and efforts and their skill to that company

were gone, and there was a huge void left. Meanwhile, the employees who decided not to go with the move, we're wondering, why the heck is the company relocating when the guy who made that decision wasn't even going to

go there. It seemed counterintuitive. Jessica rief Cohen, who as an analyst for Merrill Lynch, estimated that Blockbusters value had dropped forty percent since it had merged with Viacom, and because Bill Fields was leaving, she estimated it was going to take at least a year or maybe a year and a half to turn things around, and that's assuming that Blockbuster could find the right leader to do it.

There are also stories about Sumner Redstone, who was the head of Viacom, and his managerial approach, which, according to some people was a little bit on the authoritarian side. He was clearly unhappy with Blockbusters performance in the market, and it didn't help that while Blockbusters seemed to be floundering, Hollywood Video, its largest rival in the video rental industry, was reporting a modest sales gain. So Blockbusters doing really

badly and it's the biggest fish in the pond. And then the next biggest fish is not doing badly at all, or doesn't It seems to be doing pretty well. So who was going to come in to Blockbuster to try and turn things around. Well, I'll tell you in just a moment, but first let's take a quick break and

thank our sponsor. The next leader for Blockbuster who had the unenviable job of trying to write a listing ship was John Antiocho, and boy, his story is one that has been hashed over a lot in the business world. He's been raped over the coals multiple times, largely because in hindsight there appeared to be some enormous missed opportunities that might have saved Blockbuster. But the truth is a little more complicated than that, and I don't think that

Antiocho should shoulder all the blame. He has some responsibility, but I really don't think that ultimately it was his leadership that doomed Blockbuster. Antiocho had spent twenty years working at seven eleven. He was someone originally who would move in to help failing stores recover, and ultimately he would get promoted to a vice president position at that company.

He would later work for Pearl Vision, he worked for Circle caver A while he worked for Taco Bell for a while, and that's when Sumner Redstone reached out to him and said, would you like the role of CEO a Blockbuster? And Antiocho thought, well, here's an opportunity to try and really turn this company around. He walked into a seriously bad situation. The company's talent had been gutted. Store operations were suffering. As a result, stores were not

getting the latest titles on their street date. That meant that you could go to a store and buy a video on its release date, but you couldn't find it in a blockbuster. That was not great either. One of Antioca's first big moves was to go to the movie industry and renegotiate the way things worked with them. So the way it had been working was that video rental companies would pay higher prices for copies of movies. So

a cassette of a movie might cost sixty dollars. You know, you could go out buy it at a store for much less, but the video rental copies would be sixty five bucks. When you're buying hundreds or thousands of cassettes in order to build on an inventory, that adds up super fast. And I meant that the store would need to rent out a little around thirty times per title in order to earn back the investment made on that purchase.

So you buy a movie for sixty five dollars, you need to you need to rent out that movie thirty times in order to make your investment back, and then from that point forward it's profit. And Tioko said, hey, I got I got an idea. Let's try something else. How about we buy your movies at a much lower rate like between one to four dollars per cassette. But in return, you will get a percentage of rental revenues, Like so we'll keep sixty percent of the rental revenues,

you keep the other for the rental revenues. You get a smaller upfront fee for those movies, but there's a long tail revenue stream that will keep going for as long as the movie is being rented, And the more times the titles rented, the more money everybody makes. The movie studios came around to this idea. The movie the move also meant that a blockbuster could acquire a lot more cassettes this way, which was really important for new

popular titles. So now what blockbuster would do is for the brand new titles when they would come out, they would purchase a huge number of those. They would flood their inventory with the newest titles. I remember walking into blockbusters around this era and looking at the wall and you would just see a a like half of a shelf taken up by a new title. So you might see a popular movie and it may even take up

a full shelf depending upon the popularity. And it was largely because this renegotiation made this financially feasible, Blockbuster could almost guarantee that a new title was going to be in stock when you came by to rent it. That removed a big risk in this idea that you would show up to the video rental store only to find out the movie you wanted to rent was already out.

Antiocho also chose to move Blockbuster out of some of the businesses it had just started to get into, including that PC upgrading business that Bill Fields really was pushing for. Antiocho felt that the company really needed to refocus on its core business of video rentals, and that diversifying really meant spreading the company out too thin, particularly in the wake of losing so many employees. They didn't have the

experts expertise to keep all these other businesses afloat. But two things emerged there would be huge setbacks for Blockbuster, at least in the long run. One was the DVD format, which launched in the mid nineteen nineties. Movie studios were selling DVDs at twenty bucks or less per title, and that created a high adoption rate for movies, and that undercut rentals, Especially when you have a customer who says, well, I could rent this movie on VHS and watch a

magnet the film transfer. Or I could buy a DVD, an optical transfer that's at a higher resolution, better quality picture, better quality sound, and I can own it for less than twenty bucks. So we started to see a big dip in the video rental industry as a whole once DVDs came out like this. The other big thing that emerged in though at the time when it emerged it wasn't a big thing. It would just become an enormous

thing was a company called Netflix. I have to do a full episode about Netflix as it has become such a major player in entertainment now that it produces so much original content. But back in read Hastings and Mark Randolph co found this brand new company, and their business plan originally was to act as merely an online DVD rental company. They still do this, by the way, but

this was their only business when they first started. So the way it works is you would create a membership profile, you would subscribe, you select a plan, whatever that subscription plan is. They introduced different subscription plans about a year after they started really getting into business. You would log into Netflix's system, you would choose which titles you wanted. They would ship those titles to your mailbox and it

would come along with a return envelope. So as soon as you were done watching, you slipped the disk in the return envelope, throw that back in the mail and you're done. The company began renting DVDs in that way in and the following year. That's when it would offer up the unlimited DVD rental plan for a monthly membership fee, And in two thousand Hastings would meet with some of Antiocho's people over at Blockbuster. But more on that in just a second. Blockbuster, however, did not jump on the

DVD bandwagon right away. In fact, it held back for several years, so DVDs debut in the mid nineties. Blockbuster committed to start carrying DVDs in ninete, but it did so in a pretty slow adoption rate, and it would not really commit fully to DVDs until two thousand two,

all right back to the late nineties with Blockbuster. In ninety Viacoms sold off Blockbuster Music for a hundred fifteen million dollars because the music business just wasn't working out for a Blockbuster and Viacom executives had grown impatient with the low performance. They just felt that it wasn't worth keeping it around, so they sell it off for a

hundred fifteen million. Blockbuster meanwhile closes some stores, a lot of them in international markets, and Viacom was starting to get a little concern because Viacom had been relying on Blockbuster to provide cash flow to help pay off debt and fund acquisitions. But now Viacom found itself having having to fund money to Blockbuster, so it was no longer getting money from Blockbuster. Now it was having to kind of help keep Blockbuster afloat. That was not very attractive

to via Calm executives. In August, Viacom held an i p O of a percentage of its stock and this was all a cash raising strategy. They thought, well, we'll raise some quick cash. We'll sell off about eight of the stock we have, and then we will will make money that way. And they thought that the shares were going to trade somewhere between sixteen and eighteen dollars. In reality, they traded at fifteen dollars, so they didn't make nearly

as much money as they had hoped. Also, in another giant one that I've actually covered in previous tech stuff episodes got into Blockbusters grill in the big way. That company was Amazon. So now we have Jeff Bezos and Read Hastings both chomping at the bit to carve into the same market that Blockbuster was really after. Amazon was not interested in renting videos unlike Netflix, but it did expand beyond selling books to include other items like DVDs

and sold them for a very low price. So now you could see a lot of find a lot of those same titles over at Amazon for a price that was not that different from the rental fee that you would incur, especially when you put it on top of a membership fee at a Blockbuster, so that really ate

into their their business as well. Andiogo didn't did see that home delivery and streaming services would poise either a great opportunity for Blockbuster or a threat to the company, and he tried to take steps to build out Blockbusters capabilities to enter into those fields, but he he had

some resistance from Viacom. He also just had the problem of the fact that he was presiding over a company that still was was kind of teetering from that massive loss of talent in he led Blockbuster to form a three year partnership with America Online, the online service provider.

Blockbuster would become a premier home video provider for a o l's entertainment channel, and a o L would make a thirty million dollar investment in Blockbuster and Antiocho began to explore options for broadband content and delivery, but internet speeds in those days were not what they are today, so streaming video was largely seen as being too ambitious for what passed as the standard and internet speeds at

that time. In two thousand, we have that meeting I mentioned earlier between Read Hastings and some of Antiocho's people. So the head of Netflix and some of the folks over at Blockbuster. So what was going on. Well, Read Hastings was willing to sell Netflix to Blockbuster for the princely sum of fifty million dollars, but Blockbuster says no deal. Apparently they thought Netflix was kind of a small time

player in a niche market. They had seen that Netflix was struggling to really make money, but it was early days for Netflix. But let's flash forward today just for a quick second. Blockbuster is all but gone. It's it's really it exists kind of in name only. At this point. Netflix, however, has a market cap of a hundred fifty one point five eight billion dollars. But then again, hindsight is still

double yikes. So instead of this Netflix deal, Blockbuster decides to sign a twenty year video on demand exclusive deal with a broadband services company. That broadband services company belonged to a company called Enron. Now you might have heard that name because en Ron employees got up to some pretty serious shenanigans, and by employees, I mean executives, and by shenanigans, I mean really illegal activity. Blockbuster ended up scuttling the deal just nine months after the ink had dried,

so didn't go in Netflix, they did go within Ron ouch. Also, in two thousand, nearly eight hundred million dollars that Blockbuster takes in that year would come from late fees, So late fees would account for nearly sixteen per cent of the revenue of the company, and as services like Netflix would offer up rentals without late fees, Blockbuster would see

a steady decline in rental revenues. In two thousand one, they would end up changing their minds about rental fees and late fees rather, and that becomes a whole mess I'll talk about in just a second. Blockbuster had also committed to that DVD format back in really started to convert to all DVDs and stores by two thousand two, and two years later in two thousand four, they finally launched an online DVD rental programs similar to what Netflix

had been doing in two thousand four. But two thousand four was also when another company called coin Star introduced a new type of video rental service, red box red box DVD kiosks, which put DVD rentals in high traffic areas like like grocery stores and places like Walmart, that kind of thing. You'd see a red box there, you could just go up and put some money in and rent yourself a film. It got a lot of impulse renters that way. Blockbuster would not create a similar strategy

until two thoight. So in both cases, both with video DVD over the mail and by doing this kiosk approach, Blockbuster fell way behind the industry leaders and was suffering because of that. Now, the end of two thousand four saw the involvement of someone whose actions, ultimately, I would argue, would lead to the demise of the company and all because he was trying really hard to turn things around. More on that in just a second, but first let's

take another quick break to thank our sponsors. The person I alluded to before the break is investor Carl icon This is a name that pops up a lot in technology just and business in general. Carl icon Is is famous for his aggressive investment strategies and getting involved in corporate governance, largely through proxy fights. He buys up a whole bunch of stock shares of stock, and then gets a bunch of other shareholders together and then challenges the

board of directors of various companies. This is the way it went with Blockbuster. So icon spent about eighty four million dollars to buy nearly ten million shares of Blockbuster, which amounted to about five point eight percent ownership of the whole company, and he pushed for Blockbuster to make a move to make a hostile takeover of Hollywood Video,

which by the way, he also owned shares of. At that time, and Hollywood Video was still the arch rival for Blockbuster in the traditional video rental space, although obviously Netflix was a rising star that was taking more and more of their business. The first offer that Blockbuster would make would be a seven million dollar deal which valued

Hollywood Video shares at ten dollars cents a share. So essentially the idea was that let's go out to Hollywood Video shareholders and say we'll buy up your shares for ten dollars five cents per share, and if you agree, then that's awesome. Everyone's happy, and then we end up with a majority shareholding of the company and we can force the board of directors to do what we wanted to do and do a hostel takeover. But that deal

didn't get enough traction. Eventually the amount the offer crept up to a billion dollars, but ultimately Hollywood Video shareholders would accept a totally different offer extended by a company called Movie Gallery. In early two thousand five, Icon, not to be deterred this Hollywood Video takeover didn't work out, he decides to get more involved in Blockbusters operations, much

to the constern nation of Antiago. In two thousand five, Icon would be able to launch a proxy fight and have himself and two of his buddies elected to Blockbusters Board of directors. Uh he was able to get fourth seat a little bit later after one of the other board of directors resigned or retired really, and then Icon says, Hayntiocho, your salary is way too high. You made more than fifty million dollars in two thousand four, and the company

you're leading ain't doing so hot. I am paraphrasing, by the way. Icon also didn't like that Blockbuster had eliminated late fees in response to competitors, because late fees had accounted for a good deal of revenue in the past, and he also felt that the company had spent too much money to launch its own online store. So essentially, Icon was taking exception to all the more recent moves

that the company had made and wanted to turn back times. Somehow, this kept on going throughout two thousand four, two thousand five, and two thousand six, all while Blockbuster was struggling to hold its place. The board kept wanting to reinstate late fees to focus more on the old revenue models that Blockbuster had relied upon previously, and Antiocho and his executive

staff argued strenuously against those moves. In two thousand five, Blockbuster became the focal point for several investigations from forty eight different states in response to its no late fees marketing campaign. They alleged that the company was misrepresenting the policy to customers, and Blockbuster would ultimately settle that case

for six dollars. So what actually happened, Well, the advertised policy was that Blockbuster was instituting a no late fees approach, which sounds like, hey, you can run a movie and it doesn't matter how long you hold onto it. You'll never get charged a late fee and you can just return it whenever. That's not actually how it worked in actuality.

If a customer were to hold onto a rental beyond seven days past its due date, so a week after it was due, if you still had that title, Blockbuster would put a charge on your credit card for the full sales price of that rental. So let's say you're renting a video game that has a retail price of forty dollars and you rent it it's Dube on a Tuesday. The following tuesday, you still have it, you get charged

that forty bucks. Now, you could get reimbursed for that if you returned the title within thirty days, but you would still get charged a restocking fee. And people said, I don't know. That sounds a lot like late fees to me. You're you're wording it in a different way, but it still seems like I'm getting penalized for returning this late. And that's kind of what the court said. And so Blockbuster ended up settling without admitting wrongdoing for

six d fifty thousand dollars. And in two thousand six, the board told Antiocha that they were going to cut him a much smaller bonus check than what he was due according to his contract, and so Antiocha said, see in court, and eventually Antiocho and Icon came to an agreement that Antiocho would step down as CEO in July two thousand seven, and in return, he would get his bonus and a big exit package. And he was happy

to take that offer. He was like, you know what, I feel like I've done what I needed to do as best I could and my hands were tied and I don't need this aggravation. I'm out of here. Two thousand seven also saw a meeting between Antiocho and and Read Hastings again, uh well really for the first time. Before. Hastings had met with some of Antiocho's people, but now. They met at the Sundance Film Festival. This was obviously before Antiocho actually stepped down. The CEO Hastings was giving

an offer. This time, Hastings was coming forward and saying, hey, I will take your online business off your hands. I will buy Blockbusters online business. Antiocho thought that it would make way more sense to have a merger between the two companies, and ultimately the deal went nowhere. The new CEO from Blockbuster was someone else who came from seven eleven. His name is James Keys. Keys led the company and

changed its identity from Blockbuster Video to Blockbuster Media. He found various ways to cut costs pretty dramatically, and he began changing up the product lines and services. But Blockbuster it was too far gone. It wouldn't have mattered if keys As efforts were really great or not great at all. The company was pretty much beyond help. It had seen its business go to competitors like Netflix and red Box, had a large amount of debt that it was not able to pay off. A lot of that was owed

to Viacom, and Keys tried his best. He led a failed attempt to purchase another big company. This was a weird decision. In two thousand and eight, he was trying to acquire Circuit City. That was a one billion dollar deal, but it fell through and Circuit City would actually go bankrupt the following year. Now, I did episodes about Circuit City earlier, so you can learn more about that if

you go through the archives. But plenty of analysts looked at keys Is move when he said I want to acquire Circuit City, and they thought that just don't make no sense. I mean, a struggling company rarely improves once they acquire a different struggling company that's in another industry. Rarely do you see two struggling companies banned together and make a real go at it. It's it's that's a Cinderella story. By two thousand nine, there were whispers that

blocked Buster was headed towards bankruptcy. In March, perhaps in a move of desperation, the company reintroduced late fees, so they got rid of them and then they put them back in. And customers hate late fees, but they did represent a decent amount of revenue for Blockbuster in the past, which is why the company kind of brought him back. Before Blockbuster got rid of late fees. The company had already run into trouble once before, so I mentioned that

one about the no late fees in that lawsuit. There was actually a lawsuit that happened even before that, back in two thousand one. That's because the late fees back before this change could grow to the point where they were actually more than the value of the rental, So you could end up getting charged more than what it was what it would cost for you to go out and buy a copy of the thing you were renting, and that ended up becoming a lawsuit. So this new

reinstate of late fee would take a different approach. They didn't want to have that same issue. So the idea was that a late fee would be incurred. Get a dollar fee for every day you were late, up to ten days, and at that point it was capped, so up to an additional ten dollar fee on a late return. Not quite as as exorbitant, but customers don't like late fees, so it didn't really matter. In Blockbuster lost more than a billion dollars. The valuation for the company at that

time was twenty four million bucks. Still a lot of money, but twenty four million that was a huge fall from where Blockbuster was in its peak. Netflix, by the way, at that same time, in that little company that antiocause people had scoffed at a decade earlier, was valued at thirteen billion dollars. Even though the only remaining video chain in the United States was Movie Gallery, the only other one besides Blockbuster, uh that one underwent liquidation in so

movie Gallery goes away and liquid dates. That leaves Blockbuster as the only video rental store like physical store in the United States. And even then it wasn't enough to save the company. The stock price dropped so low that the New York Stock Exchange delisted the company, and out of options, Blockbuster would file for Chapter eleven bankruptcy protection.

In two thousand eleven, Blockbuster would hit the auction block Dish Network would purchase the company for three hundred twenty million dollars and for two years, Dish would try to keep Blockbuster going. Initially, they said we're going to shut down all but six hundred locations, and we're going to keep those six hundred locations open. They weren't able to do that very well, and the company was past the point of no return, and in Dish would end up

shutting down the remaining three hundred company operated stores. The only Blockbusters that were left in the United States after this happened were franchises. So these were independent stores that had licensed the Blockbuster name and technology, but they were not company operated. All the company operates stores were gone. Lore has it, by the way, that the last film rented from an official, company owned Blockbuster store was the movie This Is the End, and it was a Hawaiian location.

I have no idea if that's actually true, but it is a pretty cool story. Here in the United States, every single Blockbuster location, both company owned and franchised, has closed, with one exception. The very last store is in Bend, Oregon. There were two stores that were in Alaska, but both of those closed earlier. So if you like, you can travel to Bend, Oregon, you can go to that Blockbuster Video and you can get yourself a membership card to rent movies there. It will cost you thirty dollars a

month for membership. Now, seeing as Netflix offers a premier subscription plan for Blu ray rentals at half that price, and it's an even lower price if you're going for DVD rentals, it's got to be pretty tough to hold on to customers at that Blockbuster. So that's the story Blockbuster and its peak, it had nine thousand stores worldwide. Some of them were directly operated by the company, some of them were franchises. It made several people connected to

the company extremely wealthy, producing both millionaires and billionaires. But ultimately it failed to adapt to a changing market. It resisted those changes for too long, and by the time it moved to fix those problems, it was already too late. It was playing a losing game of catchup and it was losing ground with every step. So wow, what a difference. Well,

I wraps up this episode of tech Stuff. If you guys have suggestions for future episodes, Maybe there is a company, or a technology or a person in tech you would like me to cover. Maybe there's someone you would like me to have on as a guest or to interview. Let me know. Send me an email. The address is tech Stuff at how stuff works dot com, or drop me a line on Facebook or Twitter. The handle of both of those is tech Stuff H s W. Don't forget. We have a merchandise store at T public dot com

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