Why Circuit City Crashed (And Best Buy Survived)

Circuit City fired its most experienced staff — twice — while a rival invested in the exact opposite. Then Blockbuster looked at the books and ran. Circuit City went from a single TV shop in 1949 to a $12 billion electronics retailer with 60,000 employees — then to zero stores in under a decade. This business case study breaks down what happened to Circuit City: a failed proprietary DVD format, an exit from a booming appliance market, the loss of the team that built CarMax, and two rounds of layoffs that gutted the sales-floor expertise that once separated Circuit City from Best Buy. It also covers the almost-forgotten 2008 bid from Blockbuster to buy Circuit City for $1.35 billion — and why Blockbuster's own due diligence made them walk away. A business documentary on how five defensible decisions, made over nine years, ended a 60-year-old company. 📌 Key Topics Covered The 1998 DIVX format and its $300M+ failure Circuit City's 2000 exit from the appliance category The 2002 CarMax spinoff and loss of top operational talent Best Buy's Geek Squad acquisition vs. Circuit City's commission cuts The March 2007 layoffs of 3,400 senior sales staff The 2008 Wattles proxy fight and board shakeup Blockbuster's $1.35B bid — and why it collapsed Chapter 11, liquidation, and the final shutdown in March 2009 ⏱️ Timestamps 0:00 Intro — The Day Circuit City Fired Its Best 1:05 1949: How Circuit City Began 2:10 Decision 1: The DIVX Disaster (1998) 4:00 Decision 2: Abandoning Appliances (2000) 6:15 Decision 3: The CarMax Spinoff (2002) 7:00 Best Buy's Bet: Geek Squad vs. Commission Cuts 9:30 Decision 4: The 2007 Layoffs 12:00 The Proxy Fight and Blockbuster's Bid 13:30 Due Diligence: Why Blockbuster Walked Away 14:30 The Final Unraveling: Bankruptcy 15:00 Liquidation and the End 16:30 Lessons and Takeaways Subscribe to Miscalculation for more business failures, bad acquisitions, and executive misjudgments → Related:    • How Iomega Built a $1.7B Tech Empire (And ...   Which decision do you think actually killed Circuit City? Drop your pick below.