![]() All of these events soon led to Blockbuster’s downfall. ![]() In addition, Blockbuster overlooked the huge business opportunity when given a chance to buy Netflix in 2000 for $50 million. They also rolled out an online subscription service, which revolutionized the renting business scheme. Netflix charged a fixed price for renting their products and virtually removed the premise of a late fee. Their model, however, ignored the idea of charging a flat fee for products which Netflix quickly took advantage of. Blockbusters’ customer-centric model utilized a low upfront cost and a higher variable cost to appeal more towards the customer. The fees raked in $800 million dollars in 2000, which was worth about 16% of Blockbuster’s revenue that year. Late fees remained a hallmark memory for recurring customers and a primary source of income in the early 2000s. Blockbuster charged a dollar per day in late fees if a customer didn’t return their movies on time. Ideation and Business Modelīlockbuster’s business model revolved around late fees in their movie and video game rental services. The company broke the charts in the early 2000s with 60,000 employees and 9,000 stores worldwide. To gain publicity, Blockbuster operated a 25 million dollar ad campaign along with partnerships with fast-food giants such as McDonalds and Dominos. In 1992, Blockbuster bought the video rental company Ritz and spread out to over 1000 stores. ![]() In 1988, Blockbuster became the leading brand for on-demand entertainment with 800 stores. In 1987, they found themselves as the country’s 5th largest video rental store with over $43.2 million in revenues. Blockbuster grew quickly by offering quick check-out times and a wide selection of entertainment options. The company found early success with a large inventory storing over 8000 tapes, covering 6500 titles. In 1994, Huizenga sold the company to Viacom, a media conglomerate, who bought Blockbuster for $8.4 billion. He also had a stake in South Florida sports teams such as the Florida Panthers and Miami Marlins. Huizenga went on to own many Fortune 500 companies, including Waste Management and AutoNation. In the same year, Blockbuster went public with an IPO (initial public offering) of 31 million shares for 18% of the company. ![]() In 1985, Cook sold the company to Wayne Huizenga and two other investors who pooled in funds to restart the business. He aimed to fix this problem through creating the first super brand in the video rental industry. Cook found the need to open Blockbuster as many movie and video game rental companies in the area had a reduced inventory and limited amount of titles to offer the public. The business was originally started by David Cook, a local entrepreneur and software developer from Texas. Blockbuster peaked with earnings of 5 billion dollars in 2004 however, it quickly found itself being forced to shut down a year after due to an outdated platform for DVD rentals and late fees. The rental giant brought the idea of premier on-demand entertainment to life with hundreds of DVDs, video games, candy, and membership cards. The company was a household staple through its movie and video game rental services. ![]() If you were born in the ’80s or ’90s, chances are you’ve heard of Blockbuster. ![]()
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