1 00:00:00,120 --> 00:00:11,680 Speaker 1: This Day in History Class is a production of iHeartRadio, Hello, 2 00:00:12,000 --> 00:00:15,800 Speaker 1: and Welcome to This Day in History Class, a show 3 00:00:15,880 --> 00:00:20,880 Speaker 1: that rewinds history one day at a time. I'm Gabe Lucier, 4 00:00:21,120 --> 00:00:24,599 Speaker 1: and in this episode, we're flashing back to a bygone 5 00:00:24,680 --> 00:00:28,480 Speaker 1: era when watching a movie required a little more effort 6 00:00:28,680 --> 00:00:40,040 Speaker 1: than the click of a button. The day was October nineteenth, 7 00:00:40,240 --> 00:00:46,040 Speaker 1: nineteen eighty five, the first Blockbuster video rental store opened 8 00:00:46,040 --> 00:00:50,680 Speaker 1: in Dallas, Texas. With roughly eight thousand VHS titles to 9 00:00:50,760 --> 00:00:54,279 Speaker 1: choose from, the store offered customers more options for their 10 00:00:54,360 --> 00:00:57,360 Speaker 1: at home movie night than any other video store of 11 00:00:57,400 --> 00:01:01,120 Speaker 1: the era. That variety, couple with the ease of its 12 00:01:01,120 --> 00:01:06,679 Speaker 1: computerized checkout process, made Blockbuster an instant success. The company 13 00:01:06,760 --> 00:01:10,320 Speaker 1: expanded rapidly over the next few years, and by nineteen 14 00:01:10,360 --> 00:01:13,320 Speaker 1: eighty eight it had become the leading video chain in 15 00:01:13,360 --> 00:01:17,800 Speaker 1: the United States. Blockbuster later went international, and at its 16 00:01:17,840 --> 00:01:20,520 Speaker 1: peak in the early two thousands, it boasted more than 17 00:01:20,640 --> 00:01:26,119 Speaker 1: nine thousand stores worldwide. The good times wouldn't last much longer, though, 18 00:01:26,319 --> 00:01:29,880 Speaker 1: as the rise of streaming services and on demand entertainment 19 00:01:30,160 --> 00:01:35,120 Speaker 1: greatly diminished the public's interest in physical media. Today, Blockbuster 20 00:01:35,280 --> 00:01:38,800 Speaker 1: and the rental industry it revolutionized are little more than 21 00:01:38,800 --> 00:01:44,520 Speaker 1: a nostalgic curiosity. Blockbuster video was the brainchild of entrepreneur 22 00:01:44,680 --> 00:01:48,320 Speaker 1: David Cook and his wife Sandy. They had previously owned 23 00:01:48,360 --> 00:01:51,960 Speaker 1: a business that supplied computer software services to the oil 24 00:01:52,040 --> 00:01:56,000 Speaker 1: and gas industry in Texas, with David having written several 25 00:01:56,080 --> 00:02:01,480 Speaker 1: successful computer programs to manage their client's inventories. However, when 26 00:02:01,560 --> 00:02:04,480 Speaker 1: falling oil prices led to a market collapse in the 27 00:02:04,520 --> 00:02:08,600 Speaker 1: early nineteen eighties, the demand for those programs quickly dried up. 28 00:02:09,280 --> 00:02:13,359 Speaker 1: That's when Sandy suggested they pivot to the VHS rental business, 29 00:02:13,639 --> 00:02:16,760 Speaker 1: an industry that was very much on the rise, growing 30 00:02:16,800 --> 00:02:20,600 Speaker 1: from seven thousand stores nationwide and nineteen eighty three to 31 00:02:20,720 --> 00:02:24,840 Speaker 1: more than nineteen thousand in nineteen eighty six. The couple 32 00:02:24,840 --> 00:02:27,160 Speaker 1: figured that if they could apply what they had learned 33 00:02:27,160 --> 00:02:31,679 Speaker 1: about inventory management for petroleum to the market of videotape rentals, 34 00:02:31,919 --> 00:02:35,080 Speaker 1: they could create a megastore with a much wider range 35 00:02:35,120 --> 00:02:38,560 Speaker 1: of titles than their competitors. With that goal in mind, 36 00:02:38,760 --> 00:02:41,960 Speaker 1: the Cooks found a suitable location in Dallas, close to 37 00:02:42,040 --> 00:02:47,000 Speaker 1: several upscale apartment buildings, and began sourcing thousands of VHS tapes. 38 00:02:47,639 --> 00:02:50,120 Speaker 1: It was Sandy who came up with the brand's iconic 39 00:02:50,200 --> 00:02:53,440 Speaker 1: blue and yellow color scheme and with the name Blockbuster, 40 00:02:53,800 --> 00:02:56,520 Speaker 1: which was Hollywood shorthand for a movie that made a 41 00:02:56,520 --> 00:02:59,920 Speaker 1: big splash at the box office. As a side note, though, 42 00:03:00,200 --> 00:03:03,880 Speaker 1: the term blockbuster was actually coined during World War II 43 00:03:04,360 --> 00:03:07,280 Speaker 1: as a nickname for the new powerful bombs that were 44 00:03:07,280 --> 00:03:12,600 Speaker 1: capable of destroying or busting an entire city block. Then 45 00:03:12,800 --> 00:03:15,240 Speaker 1: within a decade or so, the word caught on as 46 00:03:15,280 --> 00:03:19,200 Speaker 1: a nickname for anything explosive or extravagant, like a big 47 00:03:19,200 --> 00:03:23,079 Speaker 1: budget movie with a perfect name and location in place. 48 00:03:23,360 --> 00:03:27,800 Speaker 1: The first Blockbuster video store opened for business on October nineteenth, 49 00:03:27,919 --> 00:03:32,600 Speaker 1: nineteen eighty five. While other independent video stores could only 50 00:03:32,639 --> 00:03:36,680 Speaker 1: stock about one hundred or so different movies, Blockbuster's innovative 51 00:03:36,720 --> 00:03:39,440 Speaker 1: barcode system allowed it to keep track of up to 52 00:03:39,560 --> 00:03:44,080 Speaker 1: ten thousand. Customers noticed the difference right away, turning out 53 00:03:44,120 --> 00:03:47,840 Speaker 1: in droves for the store's grand opening. As David Cook 54 00:03:47,920 --> 00:03:51,800 Speaker 1: later recalled, quote, the first night we were so mobbed 55 00:03:51,920 --> 00:03:54,280 Speaker 1: we had to lock the doors to prevent more people 56 00:03:54,280 --> 00:03:58,280 Speaker 1: from coming in. Movie buffs kept the store humming long 57 00:03:58,320 --> 00:04:01,560 Speaker 1: after opening day, so much so that within a year, 58 00:04:01,800 --> 00:04:05,360 Speaker 1: the Cooks had opened three more locations and purchased a 59 00:04:05,440 --> 00:04:09,240 Speaker 1: six million dollar warehouse to serve as a distribution center 60 00:04:09,400 --> 00:04:13,640 Speaker 1: for their massive, ever growing library of VHS tapes, and 61 00:04:13,720 --> 00:04:16,839 Speaker 1: thanks to their proprietary software, they were able to tailor 62 00:04:16,880 --> 00:04:19,880 Speaker 1: each store's selection to the tastes of its local market 63 00:04:20,240 --> 00:04:23,239 Speaker 1: and keep track of how long each tape had been rented, 64 00:04:23,640 --> 00:04:29,080 Speaker 1: giving rise to Blockbuster's infamous podoso lucrative late fees. The 65 00:04:29,120 --> 00:04:32,960 Speaker 1: Cook's initial eight hundred thousand dollars investment had paid off 66 00:04:33,000 --> 00:04:36,520 Speaker 1: in spades, and by nineteen eighty seven, David was ready 67 00:04:36,560 --> 00:04:39,279 Speaker 1: to take the money and run. He sold his stake 68 00:04:39,320 --> 00:04:42,800 Speaker 1: in the business to a group of investors, including Wayne Huseenga, 69 00:04:43,080 --> 00:04:47,719 Speaker 1: the founder of Waste Management Incorporated, the largest garbage disposal 70 00:04:47,760 --> 00:04:51,120 Speaker 1: company in the world. The sale netted the Cooks a 71 00:04:51,160 --> 00:04:54,640 Speaker 1: tidy sum of eighteen and a half million dollars, the 72 00:04:54,680 --> 00:04:58,839 Speaker 1: equivalent of just over fifty million in today's money. With 73 00:04:58,960 --> 00:05:03,040 Speaker 1: Huzenga at the helm, Blockbuster launched an aggressive expansion plan, 74 00:05:03,360 --> 00:05:06,880 Speaker 1: buying up every independent video store and smaller chain it 75 00:05:06,880 --> 00:05:10,200 Speaker 1: could get its hands on. By nineteen eighty nine, the 76 00:05:10,240 --> 00:05:13,520 Speaker 1: company had more than five hundred locations across the US, 77 00:05:13,760 --> 00:05:18,479 Speaker 1: with a new store reportedly opening every seventeen hours. A 78 00:05:18,520 --> 00:05:22,040 Speaker 1: few years later, Blockbuster celebrated the launch of its one 79 00:05:22,040 --> 00:05:26,880 Speaker 1: thousandth location and its expansion into the international market. It 80 00:05:26,960 --> 00:05:30,680 Speaker 1: was now America's number one video rental chain, a title 81 00:05:30,760 --> 00:05:34,640 Speaker 1: that attracted the attention of media giant Viacom, the company 82 00:05:34,680 --> 00:05:39,480 Speaker 1: behind brands such as MTV and Nickelodeon. In nineteen ninety four, 83 00:05:39,920 --> 00:05:43,680 Speaker 1: Viacom purchased Blockbuster and continued to focus on adding more 84 00:05:43,720 --> 00:05:47,560 Speaker 1: and more brick and mortar locations. Not long after, the 85 00:05:47,640 --> 00:05:52,200 Speaker 1: digital video disc or DVD was introduced, and Blockbuster began 86 00:05:52,279 --> 00:05:56,080 Speaker 1: gradually phasing out its huge catalog of VHS titles in 87 00:05:56,120 --> 00:05:59,640 Speaker 1: favor of the hot new technology. It was around that 88 00:05:59,720 --> 00:06:03,640 Speaker 1: same time that software developer Read Hastings was hit with 89 00:06:03,680 --> 00:06:06,839 Speaker 1: a forty dollars late fee after misplacing a copy of 90 00:06:06,880 --> 00:06:10,520 Speaker 1: Apollo thirteen he had rented from his local store. The 91 00:06:10,600 --> 00:06:13,280 Speaker 1: hefty fine gave him the idea for a new kind 92 00:06:13,320 --> 00:06:17,320 Speaker 1: of business, a DVD by mail rental service that would 93 00:06:17,320 --> 00:06:20,240 Speaker 1: allow customers to borrow as many movies as they wanted 94 00:06:20,480 --> 00:06:22,440 Speaker 1: and to keep them for as long as they liked, 95 00:06:22,640 --> 00:06:26,479 Speaker 1: without even needing to leave the house. Hastings founded this 96 00:06:26,600 --> 00:06:30,400 Speaker 1: new company, which he called Netflix, in nineteen ninety seven, 97 00:06:30,800 --> 00:06:33,720 Speaker 1: but it wouldn't get on the radar of Blockbuster until 98 00:06:33,760 --> 00:06:37,520 Speaker 1: a few years later. In the meantime, Blockbuster stayed the 99 00:06:37,560 --> 00:06:41,240 Speaker 1: course with its traditional rental service, offering movies for one 100 00:06:41,400 --> 00:06:43,880 Speaker 1: or three days at a time and making a bundle 101 00:06:44,000 --> 00:06:47,960 Speaker 1: from fines when customers inevitably returned them late. In the 102 00:06:48,040 --> 00:06:51,960 Speaker 1: year two thousand, for example, Blockbuster made eight hundred million 103 00:06:52,040 --> 00:06:55,800 Speaker 1: dollars from late fees alone, a full sixteen percent of 104 00:06:55,839 --> 00:07:00,880 Speaker 1: its total revenue. That same year, Netflix CEO Read Hastings 105 00:07:01,000 --> 00:07:04,000 Speaker 1: took a meeting with Blockbuster executives and pitched them the 106 00:07:04,080 --> 00:07:08,520 Speaker 1: idea of buying his company for fifty million dollars. Netflix, 107 00:07:08,600 --> 00:07:11,840 Speaker 1: he said, could facilitate the rental chain's expansion into the 108 00:07:11,880 --> 00:07:15,840 Speaker 1: online market, supplementing their brick and mortar locations by offering 109 00:07:15,960 --> 00:07:19,520 Speaker 1: DVDs by mail and perhaps down the line, even an 110 00:07:19,560 --> 00:07:24,160 Speaker 1: on demand streaming service. At the time, Blockbuster didn't view 111 00:07:24,240 --> 00:07:27,600 Speaker 1: Netflix as a legitimate threat to its enterprise and didn't 112 00:07:27,640 --> 00:07:30,360 Speaker 1: think the company's services would be worth the asking price. 113 00:07:31,080 --> 00:07:34,520 Speaker 1: According to Hastings, he was quote laughed out of the room, 114 00:07:35,120 --> 00:07:38,400 Speaker 1: but as we now know, the last laugh would be his. 115 00:07:39,400 --> 00:07:42,440 Speaker 1: By two thousand and four, Blockbuster was feeling the pinch 116 00:07:42,520 --> 00:07:46,480 Speaker 1: of its competition, including both Netflix and Red Box, whose 117 00:07:46,520 --> 00:07:50,440 Speaker 1: rental kiosks had started popping up at convenient locations such 118 00:07:50,480 --> 00:07:54,040 Speaker 1: as gas stations and grocery stores, eliminating the need for 119 00:07:54,080 --> 00:07:57,280 Speaker 1: a separate trip to the video store. On top of that, 120 00:07:57,600 --> 00:08:00,440 Speaker 1: the arrival of high speed internet had made it easier 121 00:08:00,480 --> 00:08:03,280 Speaker 1: than ever for viewers to pay for and watch movies 122 00:08:03,320 --> 00:08:07,880 Speaker 1: at home, no tapes or discs required. Later that year, 123 00:08:08,120 --> 00:08:12,160 Speaker 1: Blockbuster launched its own online DVD rental service to compete 124 00:08:12,160 --> 00:08:15,880 Speaker 1: with Netflix. Then it announced the end of late fees, 125 00:08:16,240 --> 00:08:19,600 Speaker 1: doing away with the controversial policy in favor of charging 126 00:08:19,640 --> 00:08:22,400 Speaker 1: customers the full price of a movie if it wasn't 127 00:08:22,440 --> 00:08:27,720 Speaker 1: returned within fourteen days. Neither venture proved popular with the public, 128 00:08:27,960 --> 00:08:31,840 Speaker 1: and the company's fortunes continued to decline as Netflix's stock 129 00:08:31,960 --> 00:08:36,000 Speaker 1: rose higher and higher. As it turned out, Blockbuster had 130 00:08:36,080 --> 00:08:39,240 Speaker 1: hit its peak in two thousand four, with nine thousand, 131 00:08:39,360 --> 00:08:43,120 Speaker 1: ninety four stores spread across the world, each one sporting 132 00:08:43,200 --> 00:08:46,800 Speaker 1: roughly six thousand square feet of movies, video games, and 133 00:08:46,920 --> 00:08:50,080 Speaker 1: junk food. But the writing was on the Wall, the 134 00:08:50,120 --> 00:08:52,680 Speaker 1: era of brick and mortar rental stores was coming to 135 00:08:52,720 --> 00:08:55,880 Speaker 1: an end, and the age of on demand media had begun. 136 00:08:56,880 --> 00:08:59,960 Speaker 1: In twenty ten, after half a decade of dwindling proper 137 00:09:00,040 --> 00:09:04,680 Speaker 1: fits and store closures, Blockbuster filed for bankruptcy. The brand 138 00:09:04,840 --> 00:09:07,720 Speaker 1: was sold to the satellite TV company Dish Network the 139 00:09:07,760 --> 00:09:11,320 Speaker 1: following year, and after a brief, unsuccessful effort to break 140 00:09:11,320 --> 00:09:14,760 Speaker 1: into streaming, Blockbuster was given up as a lost cause. 141 00:09:15,640 --> 00:09:20,040 Speaker 1: The final company owned Blockbuster closed its doors in twenty thirteen. 142 00:09:20,760 --> 00:09:24,240 Speaker 1: Fittingly enough, the last title it rented was Seth Rogan's 143 00:09:24,240 --> 00:09:27,840 Speaker 1: apocalyptic comedy This Is the End, and even though the 144 00:09:27,920 --> 00:09:30,920 Speaker 1: chain was now defunct, the customer did still have to 145 00:09:30,960 --> 00:09:34,600 Speaker 1: return it. As it turned out, though, that wasn't quite 146 00:09:34,679 --> 00:09:38,040 Speaker 1: the end for Blockbuster. As of twenty twenty three, there's 147 00:09:38,080 --> 00:09:42,320 Speaker 1: still one independently owned location in ben Oregon that's been 148 00:09:42,360 --> 00:09:45,959 Speaker 1: allowed to license the Blockbuster name and logo from Dish. 149 00:09:46,559 --> 00:09:50,679 Speaker 1: This last Blockbuster has continued on against the odds, thanks 150 00:09:50,760 --> 00:09:53,160 Speaker 1: largely to the lack of high speed internet and the 151 00:09:53,160 --> 00:09:57,360 Speaker 1: surrounding area. Its devoted customer base and a steady stream 152 00:09:57,360 --> 00:10:01,400 Speaker 1: of nostalgic tourists has certainly helped as well, hearkening back 153 00:10:01,440 --> 00:10:04,320 Speaker 1: to the sense of community that made video rental stores 154 00:10:04,400 --> 00:10:08,440 Speaker 1: such special places to begin with. It seems doubtful that 155 00:10:08,480 --> 00:10:11,920 Speaker 1: physical media and the movie rental business will ever return 156 00:10:12,000 --> 00:10:15,240 Speaker 1: to the prominence they once held in American culture, but 157 00:10:15,320 --> 00:10:17,640 Speaker 1: with a little luck, there will always be at least 158 00:10:17,679 --> 00:10:20,680 Speaker 1: a few mom and pop shops out there for customers 159 00:10:20,720 --> 00:10:23,880 Speaker 1: looking to escape the endless struggle of scrolling through a 160 00:10:23,920 --> 00:10:27,160 Speaker 1: streaming service in search of what to watch, and for 161 00:10:27,200 --> 00:10:30,440 Speaker 1: those willing to make the pilgrimage to rural Oregon. There's 162 00:10:30,480 --> 00:10:33,000 Speaker 1: still one place in the world, at least for now, 163 00:10:33,400 --> 00:10:38,200 Speaker 1: where you can even make it a blockbuster night. I'm 164 00:10:38,240 --> 00:10:42,040 Speaker 1: Gabeluesier and hopefully you now know a little more about 165 00:10:42,080 --> 00:10:46,800 Speaker 1: history today than you did yesterday. If you enjoyed today's episode, 166 00:10:46,920 --> 00:10:50,439 Speaker 1: consider keeping up with us on Twitter, Facebook, and Instagram 167 00:10:50,480 --> 00:10:54,520 Speaker 1: at TDI HC Show, and if you have any comments 168 00:10:54,600 --> 00:10:57,360 Speaker 1: or suggestions you'd like to share, feel free to pass 169 00:10:57,400 --> 00:11:00,800 Speaker 1: them along by writing to this day at I heeartmedia 170 00:11:01,040 --> 00:11:04,480 Speaker 1: dot com. Thanks to Chandler Mays for producing the show, 171 00:11:04,679 --> 00:11:07,000 Speaker 1: and thank you for listening. I'll see you back here 172 00:11:07,040 --> 00:11:10,240 Speaker 1: again tomorrow for another day in History Class.