Wayne Huizenga had in co-founded Waste Management, which grew to be the largest garbage disposal business in the world, and served as its president and chief operating officer until , when he retired. John Melk, the president of Waste Management's international division, was first to invest in a Blockbuster franchise.
With this move, Cook surrendered future control of Blockbuster, and Huizenga became the dominant voice in determining the company's future. Where Cook had envisioned growth through franchising, selling Blockbuster's name and computer system to individual entrepreneurs, Huizenga foresaw growth through company ownership of stores.
In April , two months after the men from Waste Management bought into Blockbuster, Cook left the company. Soon thereafter, the company's headquarters were moved to Fort Lauderdale, Florida. By June , Blockbuster owned 15 stores and franchised 20 others. With this base, Huizenga set out to transform Blockbuster into the industry's dominant player. He kept most of Cook's policies, such as store hours from ten a. Despite conventional wisdom that the video tape rental business was heavily dependent on hits, 70 percent of Blockbuster's rental revenues came from non-hit movies, which had the added benefit of being less expensive to purchase from distributors.
In addition, Blockbuster's management decided to eschew revenue from X-rated adult films, opting instead for a family environment. With these policies in place, Blockbuster set out on a program of aggressive expansion. The company began to buy back franchised operations with the goal of 60 percent company-owned Blockbuster outlets. In addition, Wayne Huizenga began to buy up chains of video stores that already dominated their local markets, using this as a shortcut to quick expansion.
Two months later, it purchased Movies To Go, Inc. To support its expansion, Blockbuster established six regional offices, including a distribution center in Dallas that prepared tapes to be placed in stores.
By the end of , Blockbuster was operating stores, and had become the country's fifth-largest video chain in terms of revenue. Blockbuster continued its ambitious expansion program in In March, the company purchased Video Library, Inc.
By November, this stake had risen to 20 percent. With stores, Blockbuster had become the largest video rental chain in the country. At the end of the year, the company's number of stores had risen to It also purchased Oklahoma Entertainment, Inc.
The following month brought the purchase of Vector Video, Inc. By June , two years after Huizenga's takeover, the company ran stores. Sales had tripled, profits nearly quadrupled, and the value of the company's stock had risen sevenfold. Despite these gains, in April , Blockbuster's efforts to buy up other chains with stock suffered a setback when an analyst at a large stock brokerage issued a report condemning what he considered to be the company's misleading accounting practices.
In calculating its earnings, Blockbuster spread out the costs of purchasing video store chains and building new stores over a forty-year period, and also spread out the cost of buying large numbers of hit tapes over three years, much longer than tapes retained their value. In addition, the company relied on one-time-only franchise fees for 28 percent of its revenue.
Despite this criticism, Blockbuster declined to change its accounting practices, and the company's stock price eventually regained its former level. In November , Blockbuster's largest shareholder, the United Artists Entertainment Company, announced that it would sell its 12 percent holding in the company, having previously sold its 28 franchised Blockbuster stores, in an effort to streamline its own business holdings. Worries that the video rental industry was reaching a saturation point cast doubts on Blockbuster's ability to keep opening stores indefinitely.
One response to this concern was to look to markets outside the United States for growth. In , Blockbuster was acquired by the media giant Viacom Inc. Around that same time, the e-commerce giant Amazon. Blockbuster faced additional competition from the rise of pay-per-view and on-demand movie services, through which viewers could pay for and watch movies instantly in their own homes. In , Blockbuster split off from Viacom. The venture was not successful. On September 23, , the company filed for Chapter 11 bankruptcy protection.
By , the last of the company-owned stores had closed. An independently owned Blockbuster in Bend, Oregon , is the only store still open.
But if you see something that doesn't look right, click here to contact us! The largest-ever one-day percentage decline in the Dow Jones Industrial Average comes not in but on October 19, As a number of unrelated events conspired to tank global markets, the Dow dropped points— Commercial: There's a better way to rent movies.
Go to Netflix. Keep them as long as you want, without late fees. Then, when you're done, look: prepaid envelopes. Return one and they'll send you another movie from your list. All the movies you want, 20 bucks a month, and no late fees. Kim: It took Blockbuster almost five years to introduce its own DVD-by-mail service and even longer to scrap late fees.
Kim: By that time, Netflix had amassed almost 3 million customers, had no store overheads, and was preparing to launch its revolutionary streaming service. Blockbuster's troubles continued through the mids. After parting from Viacom and experimenting with in-store concepts such as DVD and game trading, Blockbuster was in the midst of an identity crisis.
Its foray into video-on-demand streaming came too late, and over the next three years, Blockbuster died a slow and painful death. DVD-by-mail services stopped, its various partnerships folded, and stores worldwide were rapidly plunged into administration. Its 9,strong chain had been reduced to one single franchise in Bend, Oregon. Click here to learn more. A leading-edge research firm focused on digital transformation. Good Subscriber Account active since Shortcuts.
Account icon An icon in the shape of a person's head and shoulders. It often indicates a user profile. Log out. US Markets Loading H M S In the news. Frank Olito. The first Blockbuster opened in in Dallas, Texas. Over the next two decades, Blockbuster became the top movie -rental business in the US. However, Netflix and Redbox started challenging Blockbuster since they had no rental fees. Visit Business Insider's homepage for more stories. David Cook opened the first Blockbuster in
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