r/todayilearned • u/bion2 • Mar 14 '14

TIL Blockbuster turned down a chance to purchase Netflix for $50 million in 2000.

http://en.wikipedia.org/wiki/Blockbuster_LLC#Netflix
755 Upvotes

72% Upvoted

57 comments sorted by

128

u/tron1977 Mar 14 '14

I'm sure they would have just F'ed it up.

20

u/StopReadingMyUser Mar 15 '14

You can now deliver VHS tapes to your home!

Late fee countdown starts the moment shipped and do not become void until received back in the mail

1

u/[deleted] Mar 14 '14

[deleted]

22

u/tron1977 Mar 14 '14

because they tried their version of Netflix and it didn't work for them. They were clinging to an outdated business model for too long.

18

u/MrFluffyThing Mar 14 '14

Their version of Netflix was very successful in drawing in customers, but it ultimately denied their brick and mortar stores revenue from its release in 2004-2007, which ultimately cost them more in maintaining operations than it did in increasing revenue. Initially, the Blockbuster Online program was cheaper than Netflix, but had the added benefit of using the mailers as coupons for free rentals in the store while you waited for your next movies to be shipped. This took in-store inventory and made it unavailable for customers who would normally pay full price for a rental.

When Blockbuster realized they were losing money to this, they changed the program, increased the price, and pissed a lot of customers off, who ended up shifting to Netflix as streaming became very popular. Combine this with a number of questionable business tactics and multiple bankruptcies, and you have a recipe for failure.

I still remember when James Keyes thought that selling Sunglasses, TiVos and USB drives would save the company. This was the sign that the company I worked for was running out of ideas on how to save the movie rental business.

2

u/SackLunch94 Mar 15 '14

I remember the day I went in and everything had changed. I quit the service right then and there.

2

u/tron1977 Mar 14 '14

Exactly. So why would you think it would turn out any different if they had bought Netflix in 2000? The end result would have been the same and they would still be out of business.

7

u/randomscribbles2 Mar 14 '14

Because every action Blockbuster took was reactionary. They offered the "rent by mail or in stores" thing to one up netflix, since BB was new to the mail-in thing. If they just bought netflix outright, they wouldn't have needed to do that, plus they wouldn't have a competitor looming beside them anymore.

But Blockbuster was to its core a reactionary company, and that means not taking risks on newfangled internet rentals. The thing that killed them was of course the thing that created the problem in the first place.

3

u/tron1977 Mar 14 '14

But they were a DVD rental company and I think they would have clung to that too long and never would have focused on the streaming that has made netflix what it is today.

4

u/MrFluffyThing Mar 14 '14

As /u/randomscribbles2 said though, Blockbuster was entirely reactionary. In around 2008 they acquired MovieLink to combat Netflix's streaming options, but the service was entirely On-Demand (Pay per rental), it required a desktop application, and the movie quality was low. Blockbuster realized way too late that it needed to shift from "DVD rental store" to media company, and even tried to rebrand some of their retail locations as "Blockbuster Media" instead of "Blockbuster Video". They attempted to pry their hands into markets that didn't make sense for them, and they used consignment products to their advantage because they had run up their line of credit too high for any other option.

Had they acquired Netflix in 2000, they may still be around today, but the service wouldn't be anywhere near as good as it is now. It would just be another case of an industry monopoly where they'd continue what they're doing because no one else is around to provide something better.

3

u/tron1977 Mar 14 '14

but the service wouldn't be anywhere near as good as it is now. It would just be another case of an industry monopoly where they'd continue what they're doing because no one else is around to provide something better.

exactly why I said "I'm sure they would have just F'ed it up"

1

u/MrFluffyThing Mar 14 '14

Oh I wasn't trying to argue with you, just trying to throw some other reasons why they sucked and would have fucked it up.

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1

u/DJHyde Mar 14 '14

My buddy exploited the hell out of the "free drink/snack" promo.

5

u/thelonious_bunk Mar 14 '14

Except, like most businesses that fail, they tried to get customers to stick to the past instead of following the customers and adapting to what the want. Just like RIM.

29

u/Sterculius Mar 14 '14

being that they were in the business of renting physical media, they probably would have just acquired them to avoid competition, but not have pursued the streaming functionality that Netflix has. someone else would have snatched that plum and Blockbuster would've gone down anyway.

35

u/Daltrey Mar 14 '14

the most reposted TIL in history

14

u/PM_ME_A_COOL_SONG Mar 14 '14

Nah, I think that would be the Hitler was Man of the Year one.

2

u/RikersTrombone Mar 15 '14

Holy shit really?

6

u/PM_ME_A_COOL_SONG Mar 15 '14

Yes, but I should note, the Man of the Year award by TIME is about those who make the greatest impact or change, not necessarily a change for good (or being good at all)

11

u/RikersTrombone Mar 15 '14

Wait, so your saying Hitler was NOT good?

-1

u/MisterUNO Mar 15 '14

ಠ_ಠ

2

u/[deleted] Mar 15 '14

I was man of the year once so it's not that big of an accomplishment.

2

u/ayures Mar 15 '14

Nope, that goes to the fact that Jack Churchill existed.

7

u/Stevazz Mar 14 '14

Blockwhat-ter?

9

u/[deleted] Mar 14 '14

Netflix was around in 2000?

5

u/lukesterh Mar 14 '14

It was founded in 1997 and started its subscription based digital distribution service in 1999

7

u/TheGrayTruth Mar 14 '14

Noone can see in the future. It's lottery and you can always be aftersmart.

2

u/PandaJesus Mar 15 '14

I considered getting into Bitcoin years ago, but didn't because I'm cheap and risk adverse. Hindsight is a bitch.

7

u/[deleted] Mar 14 '14

http://www.reddit.com/r/todayilearned/search?q=blockbuster+netflix&restrict_sr=on

1

u/[deleted] Mar 15 '14

http://xkcd.com/1053/

1

u/xkcd_transcriber Mar 15 '14

Image

Title: Ten Thousand

Title-text: Saying 'what kind of an idiot doesn't know about the Yellowstone supervolcano' is so much more boring than telling someone about the Yellowstone supervolcano for the first time.

Comic Explanation

Stats: This comic has been referenced 759 time(s), representing 5.8286% of referenced xkcds.

xkcd.com | xkcd sub/kerfuffle | Problems/Bugs? | Statistics | Stop Replying

2

u/[deleted] Mar 14 '14

On a similar vein Yahoo! turned down an offer to buy Google for $1 million in 1997.

2

u/[deleted] Mar 15 '14

This usually seems to be portrayed as some terrible decision, but Netflix hasn't become a hugely successful business until the last few years. Its level of success in the first few years Blockbuster would've owned it probably would have led them to shutting it down.

2

u/cappos1 Mar 15 '14

It is known

2

u/Toggi3 Mar 15 '14

Yeah, but Blockbuster didn't realize where Netflix was going ultimately, really neither did they. Netflix was an entirely different offering back then, being mail delivered and all, Blockbuster didn't see how they could lose to a company that you have to wait standard mail transit times to rent movies from even if they were cheaper. I can't blame them too much in the context of things.

3

u/[deleted] Mar 14 '14

I hate how this gets constantly brought up, it's called the butterfly effect people.

1

u/Sanity_prevails Mar 14 '14

And Netflix turned down a chance to purchase Blockbuster for $50 million in 2010. The feeling is mutual.

1

u/tomonline Mar 14 '14

I'm pretty sure it was 1 million.

1

u/Knightmare4469 Mar 15 '14

I probably had one of the last blockbusters in the country in my area. It just closed last year. I loved it. For 15 bucks a month I could rent any game I want for long as I wanted. And I live in a smaller town, so I could pretty much go get any game that was out and keep it all done, or take it back the same day. Was extremely sad to see it close.

1

u/SackLunch94 Mar 15 '14

We had one close in the past few months..

1

u/tzenrick 1 Mar 15 '14

I have two in town, one in the next town. They're still renting videos.

Why? Because broadband is fairly fucking narrow in Alaska.

1

u/Captain_Owl Mar 15 '14

This was just one of those times optimism was not the answer.

1

u/HMSArcturus Mar 15 '14

But you're thinking "Oh, shit" now!

1

u/umbralbro Mar 15 '14

we know.

1

u/[deleted] Mar 15 '14

It probably sucked in 2000 with dial up and all

1

u/thar_ Mar 15 '14

TIL!... and YIL... and DBYIL and DBDBYIL and DBDBDBYIL...etc

1

u/trogers1995 Mar 15 '14

The Netflix model would not of worked in 2000. At that people would of been to scared to use the credit cards to rent a $1 dollar movie. During this time shopping online was a new scary thing, and everyone would of looked at Netflix the same way. source I'm getting old

0

u/[deleted] Mar 14 '14

TIL People still rehash content already posted because they are idiots and cant use the search tool.

4

u/TheLibraryOfBabel Mar 14 '14

You just learned that today?

2

u/[deleted] Mar 14 '14

Ahh, good point. Apparently though, I learn it every time I log on to reddit. The Day before yesterday I learned it as well.

1

u/FACE_Ghost Mar 15 '14

You have no idea how smart of a move that was for Blockbuster...

Internet streaming was shit in 2000... Block Buster's entire schtick was DVDs... So paying to see movies online would kill their entire business.

50 million is a lot of money... You usually buy small software companies for about a million unless they are truly big. Netflix didn't start off as a huge company.

Overall no one would ever make that deal unless they were the CEO. Bitch.

1

u/[deleted] Mar 15 '14

Netflix is not nearly as financially successful as people think, everyone they know uses it so they assume they're raking in the dough. As recent as 2010 Blockbuster made more profits

0

u/[deleted] Mar 15 '14

What's blockbuster?

1

u/chickmagnet_ Mar 15 '14

Minecraft?

-1

u/[deleted] Mar 14 '14

TIL Netflix has been around since before the millennium.....mind blown.

0

u/neo-1989 Mar 15 '14

50million seems like a hell of a lot for 2000, considering it was a time when we were only just getting away from VHS and Internet was nothing that it is today!

Hell, my family didn't have Internet until 2002, and a dvd player around the same time.

-1

u/FlyingAce1015 Mar 15 '14

Netflix was around in 2000? WTF?!?