Blockbuster Inc.: From Tiny Texas Shop to International Entertainment Company

It’s hard to believe that Blockbuster (NYSE: BBI) will be celebrating its 25th anniversary in a year.  The video chain, which started in Texas in 1985, was one of the first video rental companies in the world.  The company opened its first store in Texas, but soon expanded across the United States and then the world. Today, there are hundreds of stores in many countries, including Canada, the UK, Ireland and Mexico.

Besides movies, Blockbuster also rents out games for all three major consoles and generally has a lot of selection.  In addition, they have tried other formats outside of movies.  For example, Blockbuster Block Party, an entertainment “complex” featuring video games, restaurants and laser tag (among others) was test-marketed in New Mexico.  A few years ago, a mailing rental service, called Blockbuster Online launched in the US market to compete with Netflix.  This prompted Netflix to sue Blockbuster for patent infringement.  The suit was later settled, and Blockbuster paid Netflix over $4 million.  Blockbuster Online continues to operate, but is not yet available in other countries.

Blockbuster has seen the full evolution of the video industry.  When it first opened 24 years ago, VHS was winning the videocassette war as VCRs were becoming more and more common in people’s homes.  Fast forward some 20 years, and the DVD has out-rented the VHS.  Fast forward another three or four years, and you find a similar war, this time between Blu-Ray and HDDVD, with Blu-Ray being victorious.  However, things are changing much quicker than they were years ago.  With downloading and video-on-demand gaining popularity, the question remains as to whether Blockbuster and other video rental stores will survive.

On Tuesday, April 28, Blockbuster opened at 0.70 and closed at 0.71.  Its 52-week highs and lows were 3.55 and 0.13.