Blockbuster, the video rental chain that once dominated the market with its thousands of physical locations worldwide, experienced the beginning of its demise in 2004 when Viacom sold its majority stake in the video renting business. Blockbuster made many strategic errors throughout its history that caused it to have such a stunning fall from grace. The following are some of the reasons why Blockbuster failed:
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Poor management: Inefficient management significantly contributed to Blockbuster’s decline.
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Slow failure adapting to compete with the constant changes to multimedia technology: Blockbuster was too slow to adapt to the shifting customer needs and preferences. They got comfortable with their business model and ignored new technologies changing the entertainment industry.
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Competition from Netflix: The increasing competition from Netflixs mail-order service, video on demand, and Redbox automated kiosks was a major factor causing Blockbuster's decline.
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Great Recession: The Great Recession was another factor that contributed to Blockbuster’s decline.
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Rejected an agreement with Netflix: Blockbuster made a critical error when it walked away from a deal with Netflix. Netflix wanted to sell its company to Blockbuster for $50 million in 2000, but Blockbuster rejected the deal. If the transaction had been approved, Netflix would have been in charge of Blockbuster’s online operations.
In 2010, the rental company filed for bankruptcy after Netflix's popularity continued to grow. In an attempt to wipe out $1 billion of debt, Blockbuster filed for bankruptcy, and the company was delisted from the NYSE. The following year, Dish Network bought the company out of bankruptcy for $320 million in hopes of keeping 600 stores open. However, Dish Network announced in 2013 that it would close the remaining Blockbuster stores.
