Blockbuster Didn’t Ignore Netflix. So What Actually Killed It?

Did Blockbuster fail because it turned down Netflix for $50 million? That part is true, but it's the least useful part of the story. By 2007, Netflix told its own shareholders that its growth was slowing because of Blockbuster Online. This business documentary follows three decisions through the companies' own SEC filings: the 2004 Viacom exit deal that left Blockbuster with about $1.1 billion of debt, the bet on no late fees, Blockbuster Online and Total Access, and the 2007 pullback after a boardroom fight. Along the way, every popular claim gets a verdict: true, partly true or false. BoardroomTruths Toolkit, this episode (#17–19) #17 The owner's-exit test: when an owner sells you off, ask who leaves with the cash, and who stays with the debt. #18 The price-war test: before you start a price war, know who pays for winning, and for how long you can keep paying. #19 The staying-power test: when a costly bet starts working, ask whether your owners will let you finish it. BoardroomTruths: the decisions behind the outcomes. Chapters 00:00 Blockbuster turned down Netflix for $50 million. True, but not why it failed 00:50 How Blockbuster made money, and the late-fees myth 01:43 Decision 1: the Viacom exit deal and $1.1 billion of debt 03:05 Decision 2: Blockbuster Online, Total Access and Netflix's 2007 slowdown 05:15 Decision 3: Carl Icahn, the CEO change and the Total Access pullback 07:21 In fairness: Blockbuster's side 08:01 Redbox, bankruptcy and the scorecard Key sources Netflix 2007 annual report / 10-K: https://www.sec.gov/Archives/edgar/da... Netflix Q2 2007 results release (8-K, 23 Jul 2007): https://www.sec.gov/Archives/edgar/da... Netflix S-1, 2002 (2000 results): https://www.sec.gov/Archives/edgar/da... Blockbuster 10-K for 2004: https://www.sec.gov/Archives/edgar/da... Viacom 10-K for 2004: https://www.sec.gov/Archives/edgar/da... Blockbuster 8-K, 14 Dec 2004 (end of late fees): https://www.sec.gov/Archives/edgar/da... Icahn group proxy statement, Apr 2005: https://www.sec.gov/Archives/edgar/da... Blockbuster 8-Ks: 19 Mar, 27 Jun, 2 Jul and 8 Nov 2007; 14 Apr 2008; 23 Sep 2010; 12 Apr 2011 (via sec.gov) Blockbuster 10-K for 2007: https://www.sec.gov/Archives/edgar/da... Blockbuster 10-K for 2009: https://www.sec.gov/Archives/edgar/da... Coinstar (Redbox) 10-K for 2010: https://www.sec.gov/Archives/edgar/da... The full source list is available on request. Notes The $50 million meeting is described from the participants' own accounts (Marc Randolph's 2019 book; John Antioco to Next TV, 2022); they differ on details. Jim Keyes's view is from his interview with Fortune (8 Mar 2024). Subscriber counts are approximate, as the companies reported them. Some revenue figures were later restated for discontinued operations. Photos tagged with places and dates are not necessarily the stores in the events described. Image credits (via Wikimedia Commons): Jon Konrath, Tony Webster, Adam Kent, CC BY 2.0 (creativecommons.org/licenses/by/2.0); Dwight Burdette, CC BY 3.0 (creativecommons.org/licenses/by/3.0); Mr. Satterly, CC0; Evan-Amos, public domain. Diagrams and charts are original. Not affiliated with or endorsed by Blockbuster, Netflix, Viacom, Redbox, DISH, Circuit City or any company named. Names are used for identification only. Educational disclaimer: this video is for informational and analytical purposes only. It is based on company filings and published accounts, and should not be treated as investment advice. Narration is a synthetic voice (Kokoro TTS). Music is original. #Blockbuster #Netflix #BusinessDocumentary