# Why wasn't Blockbuster prepared for online movie streaming? **URL:** \ **Category:** Factual Questions\ **Created:** [June 5, 2018, 3:54pm UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470 "2018-06-05T15:54:41Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Blakeyrat](https://avatars.discourse-cdn.com/v4/letter/b/ecd19e/32.png) [@Blakeyrat](https://boards.straightdope.com/u/Blakeyrat)\ **Post date:** [June 5, 2018, 11:19pm UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/61 "2018-06-05T23:19:23Z")
(Oops, Garuda was Thai. Sorry Thailand.) ---
**Author:** ![Intergalactic\_Gladiator](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/intergalactic_gladiator/32/112_2.png) [@Intergalactic\_Gladiator](https://boards.straightdope.com/u/Intergalactic_Gladiator)\ **Post date:** [June 5, 2018, 11:26pm UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/62 "2018-06-05T23:26:56Z")
> [@The\_Other\_Waldo\_Pepper](#): > > [“No More Late Fees!”](https://m.youtube.com/watch?v=92S-S9vJ0PA) > > Man, the _balls_ of that ad: cheering crowds! Fireworks! People applaud, or dance in the streets, or drop to their knees! A black man nods approvingly! A white woman says, “it’s so beautiful!” It’s as if one thing can unite folks from all walks of life, as we’re told, Someday, You’ll Remember Where You Were When You First Heard That There Are No More Late Fees At Blockbuster! If You Need An Extra Day Or Two With Your Movies Or Games, _You Go Right Ahead!_ Take ‘Em! Relax! Enjoy! > > (Unsaid: oh, there’s still a fee if you’re late; but it’s not a late fee!) Oh yes this. This is what I came to mention. Netflix didn’t care about late fees, they just wouldn’t send you another movie until they got theirs back. Blockbuster held too tightly to the late fees model for too long and got bit by it. Along with that, Netflix’s customer service was way more accommodating in regards to their disks. My wife accidentally sent a Blockbuster DVD to Netflix and a Netflix DVD to Blockbuster. The Netflix agent was so cool about it when I talked to her: she said it happens a lot, she sent the next movie in our queue, tracked the errant DVD and got that back to us, and even gave us a bit of a refund. Blockbuster piled up late fees until we got the correct movie back to them. Didn’t they get in some kind of trouble over their non-late fee late fees as well? I don’t remember. In the end, Dish Network bought Blockbuster and they just tried to sell their networks in the Blockbuster stores. I went in there once and was cornered by this poor kid who had to take me through his whole spiel for Dish Networks while a manager watched from just enough of a distance away. He seemed apologetic when he couldn’t stop, but he kept going on with the sales pitch even though I assured him that we didn’t want Dish Network. ---
**Author:** ![iamthewalrus\_3](https://avatars.discourse-cdn.com/v4/letter/i/258eb7/32.png) [@iamthewalrus\_3](https://boards.straightdope.com/u/iamthewalrus_3)\ **Post date:** [June 5, 2018, 11:33pm UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/63 "2018-06-05T23:33:17Z")
It’s not clear to me that there’s anything Blockbuster could have done. The problem is that a retail giant has a legacy cost structure that simply can’t compete with the logistics of a smaller Internet company. Here’s a [chart of Blockbuster vs Netflix revenues](http://go-digital.net/blog/2011/02/netflix-vs-blockbuster-perfect-example-of-an-industry-replaced-by-a-more-efficient-version-of-itself/) from 2004 to 2010. The most important datum in this chart is that Netflix’s revenue when Blockbuster goes out of business is only 1/3 of Blockbuster’s at the start of the chart. Blockbuster had leases and franchisees and other contracts that stuck them with expensive retail space and employees. Netflix had a few mailrooms on cheap land, an efficient postal service, and envelope stuffers that could process 50 times what a Blockbuster retail employee could. There was simply no way for them to compete. All the unit scale economics that led Blockbuster to where it was (VHS tapes are big and can’t be cheaply shipped in envelopes, VHS tapes were expensive at first, leading to a longer rental payback, there was no efficient mechanized way to have renters pick movies from the catalog) changed drastically, and the business they built on the old economics could not compete. ---
**Author:** ![wolfpup](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/wolfpup/32/10618_2.png) [@wolfpup](https://boards.straightdope.com/u/wolfpup)\ **Post date:** [June 6, 2018, 12:00am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/64 "2018-06-06T00:00:02Z")
> [@Dewey\_Finn](#): > > I think I’ve read Reed Hastings quoted as saying that he intended to build a streaming service all along, but it wasn’t feasible until fast Internet was common. That may have been his vision, which would have been far-sighted, but Netflix was founded in 1997, and at that time betting a company on the future of streaming would have been a risky proposition to say the least. Back then, the majority of consumer Internet access was still over dial-up. Few people had their own LAN at home (what would they need one for?), and those that did were faced with mostly first-generation wired Ethernet (second-generation 100 Mbps Ethernet had only been standardized two years previously, and most implementations still maxed out at a theoretical 10 Mbps and a practical speed just a fraction of that) or primitive, unreliable first-generation wireless that predated even wireless-B and was intolerably slow. It might have been easy to believe that LAN technologies would soon become much faster to keep pace with faster computers with much larger storage capacities, but it was far from clear that broadband Internet would become ubiquitous and that, even if it did, the underlying infrastructure in every tier, in every neighborhood and across the world, would explode in bandwidth capacity as much and as rapidly as it did. It was just two years before Netflix was founded that the very first cable broadband pilot in North America was started, merely as a feasibility test. Undoubtedly there were still people around who saw ISDN with its 64 Kbps bearer channels as the future of consumer telecom. And, indeed, in the years long after broadband rolled out, broadband ISPs were still trying to control their infrastructure costs by clamoring for ridiculously low industry-wide monthly bandwidth caps, and some had already imposed such limits on their own. In addition to all that, and as part of the same bandwidth concerns, some ISPs started a practice known as traffic shaping, where data packets associated with high-bandwidth traffic were intentionally throttled. It was not hard to believe that movie streaming could be targeted as such a bandwidth hog, and that, perversely, large broadband ISPs could see this as an opportunity to launch their own streaming services (as indeed some did) that would be exempt from such meddling. In fact some saw movie streaming services as a natural synergy with running broadband ISP services. They turned out to be wrong only because they were incompetent and Netflix did it better. So it wasn’t entirely unreasonable for Blockbuster to be skeptical about streaming until it was too late. Not that Blockbuster wasn’t a sucky organization anyway, but there were good reasons to be skeptical. There’s also the fact that streaming would have been completely alien to their business model. They weren’t so much a movie distributor as they were a brick-and-mortar retailer. Streaming was also quite different from Netflix’s original mail distribution model, but at least they were already a centralized organization with a virtual presence, so they were at least appropriately structured for it. ---
**Author:** ![erysichthon](https://avatars.discourse-cdn.com/v4/letter/e/d07c76/32.png) [@erysichthon](https://boards.straightdope.com/u/erysichthon)\ **Post date:** [June 6, 2018, 12:45am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/65 "2018-06-06T00:45:22Z")
> [@CurtC](#): > > There’s Amazon Prime Video. It’s not cheap, though. Besides the Prime subscription fee, the rental rates are pretty high. I just looked up _Terminator 2_ as an example and it’s $6.99 to watch it. I think you were looking in the wrong place. It’s $3.99 to rent, $6.99 to buy. You can also rent streaming movies at Amazon without a Prime membership. I’ve done that a few times. I do agree with your point that streaming rentals are a bit pricey, especially when compared to Redbox or a Netflix DVD subscription. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [June 6, 2018, 12:55am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/66 "2018-06-06T00:55:25Z")
> [@erysichthon](#): > > You can also rent streaming movies at Amazon without a Prime membership. I’ve done that a few times. > > I do agree with your point that streaming rentals are a bit pricey, especially when compared to Redbox or a Netflix DVD subscription. This is correct - a certain set of videos are available on Prime, either temporarily or permanently. Renting movies or whatnot is separate. If you have Prime, you just get some freebies from the start. and don’t need to pay for them. I’ve seen that most movies are $3.99, but newer ones tend to be $5.99 instead. Some companies seem to be a bit greedy about it though and charge unusually high prices, or apparently declined to list specific titles for rental for no reason. Prime Video is a bit of an odd duck in that it has some _shockingly_ hard-to-find stuff, but misses almsot all the current-run content you might expect on NetFlix. ---
**Author:** ![smiling\_bandit](https://avatars.discourse-cdn.com/v4/letter/s/e9a140/32.png) [@smiling\_bandit](https://boards.straightdope.com/u/smiling_bandit)\ **Post date:** [June 6, 2018, 1:06am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/67 "2018-06-06T01:06:32Z")
Well, that’s annoying - I was trying to remove almost all of that pointless detail and point out that Amazon Prime, Redbox, and Netflix sort of took the basic idea of Blockbuster and diversified it. Blockbuster couldn’t do so because it had all the infrastructure to an existing market which declined too fast. Unfortunately, that can happen even to a well-managed business. ---
**Author:** ![Bear\_Nenno](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bear_nenno/32/3358_2.png) [@Bear\_Nenno](https://boards.straightdope.com/u/Bear_Nenno)\ **Post date:** [June 6, 2018, 1:14am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/68 "2018-06-06T01:14:01Z")
There’s a Blockbuster near my house. I could go by there and ask them. ---
**Author:** ![Dewey\_Finn](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dewey_finn/32/4222_2.png) [@Dewey\_Finn](https://boards.straightdope.com/u/Dewey_Finn)\ **Post date:** [June 6, 2018, 1:21am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/69 "2018-06-06T01:21:57Z")
> [@aceplace57](#): > > Did Netflix rent vhs in the early days? > > I recall Blockbuster had vhs and dvd for a long time. Some of the older titles were only on vhs. No, Netflix never rented titles on VHS tape. The whole business model was based on the fact that a DVD could be mailed in an envelope. I think Reed Hastings even mailed a DVD to himself just to test this, and verify that the USPS wouldn’t break the disc in its machinery. And someone mentioned Blockbuster’s late fees. Another story is that Reed Hastings got the idea for Netflix after having to pay late fees at Blockbuster. One more story. Early on, one of the things people hated about Blockbuster was that the stores never had enough copies of the popular new releases. So they came up with a plan where the studios would provide as many copies of the titles as Blockbuster needed for all of its stores. In exchange, the studio would get a cut of each rental. ---
**Author:** ![Quintas](https://avatars.discourse-cdn.com/v4/letter/q/48db29/32.png) [@Quintas](https://boards.straightdope.com/u/Quintas)\ **Post date:** [June 6, 2018, 1:37am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/70 "2018-06-06T01:37:35Z")
> [@Hampshire](#): > > So nowdays if I have the urge on a Friday night to see some random hit movie from the 70s or 80s there’s pretty much nowhere to go to? > It’s not available to stream. Video rental stores are gone. Redbox only carries the new stuff. Neflix by mail I have to wait days to get it. > > I thought streaming was supposed to be this awesome thing that replaced Blockbuster? KODI ---
**Author:** ![Jophiel](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/jophiel/32/66_2.png) [@Jophiel](https://boards.straightdope.com/u/Jophiel)\ **Post date:** [June 6, 2018, 1:54am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/71 "2018-06-06T01:54:22Z")
> [@John\_Bredin](#): > > I don’t know if they’re in your area, but there’s still a chain of video rental stores: Family Video. There’s a bunch in the suburbs of Chicago, so it isn’t just a rural niche of slow Internet/slow to adopt new tech. 🙂 > [@iamthewalrus\_3](#): > > Blockbuster had leases and franchisees and other contracts that stuck them with expensive retail space and employees. Part of what has helped Family Video survive is that they own the land their stores are on. In fact, if you see a Family Video with a small strip mall, they probably own the mall as well and are [leasing the spots](http://legacypro.com/) to the other businesses. They’ve also spun off some unlikely businesses under the Family Video umbrella; besides property management the Family Video parent company runs an exercise/gym chain, a chain of phone repair shops and a pizza chain. ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [June 6, 2018, 3:33am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/72 "2018-06-06T03:33:06Z")
> [@Dewey\_Finn](#): > > One of the big advantages of the Netflix model was and is that the central warehouse can stock many more titles than a single Blockbuster location can. So you can get really obscure stuff from them. And that’s why I signed up with Netflix in the first place. Streaming was barely on the radar when I joined in 2007. ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [June 6, 2018, 3:35am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/73 "2018-06-06T03:35:45Z")
> [@John\_Bredin](#): > > I don’t know if they’re in your area, but there’s still a chain of video rental stores: Family Video. There’s a bunch in the suburbs of Chicago, so it isn’t just a rural niche of slow Internet/slow to adopt new tech. 🙂 Lots of people also use the library as their “video store”. Family Video has a presence in my city, too, and IMHO their pizza business is what’s keeping them afloat. I understand that they also purchase strip malls and use the rental income from the other tenants to stay profitable. It appears that a huge proportion of their video business is children’s titles. ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [June 6, 2018, 3:39am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/74 "2018-06-06T03:39:42Z")
> [@Little\_Nemo](#): > > It’s weird for somebody my age. I can remember back in the early eighties when video stores were as rare as they are nowadays. And then video rentals took off (once people decided to go with VHS rather than Betamax or Laser Discs) and you saw new video stores opening each month. > > So I got to watch the video rental industry both explode and then implode twenty years later. In the mid 1980s, video stores were as common as vape shops are now. One of the most popular video stores in my area had the restrooms in the porno section. :dubious: ---
**Author:** ![nearwildheaven](https://avatars.discourse-cdn.com/v4/letter/n/90db22/32.png) [@nearwildheaven](https://boards.straightdope.com/u/nearwildheaven)\ **Post date:** [June 6, 2018, 3:42am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/75 "2018-06-06T03:42:47Z")
> [@Hampshire](#): > > So nowdays if I have the urge on a Friday night to see some random hit movie from the 70s or 80s there’s pretty much nowhere to go to? > It’s not available to stream. Video rental stores are gone. Redbox only carries the new stuff. Neflix by mail I have to wait days to get it. > > I thought streaming was supposed to be this awesome thing that replaced Blockbuster? You’d be surprised what’s on You Tube. Now that I can get it through my TiVo, I watch things this way all the time. ---
**Author:** ![sweepkick](https://avatars.discourse-cdn.com/v4/letter/s/87869e/32.png) [@sweepkick](https://boards.straightdope.com/u/sweepkick)\ **Post date:** [June 6, 2018, 4:08am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/76 "2018-06-06T04:08:22Z")
Huh, there are still six Blockbusters stores in Alaska. Two in Oregon. One in Texas. Be kind. Rewind. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 6, 2018, 6:30am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/77 "2018-06-06T06:30:10Z")
> [@Akaj](#): > > From what I’ve read (admittedly, not much), the studios raised their licensing fees for Netflix, Amazon, etc., because those companies became direct competitors in creating original content. I wonder if a new service that promised to stay away from original content would be able to strike a better deal. > > Or – more likely – studios create their own streaming channels to undercut cable PPV offerings. > > Either way, there’s an audience out there that Netlix’s streaming service is not serving. Someone will find a way. Speaking of missing streaming, a lot of content creators licensed their content to Netflix for next to nothing in the beginning because they didn’t see streaming as catching on. Once they realized how badly they screwed themselves, they stopped licensing and once streaming became reasonably simple to implement, did their own. Thus HBO streaming, and Disney streaming, and CBS streaming. Not more likely - it is happening. And Netflix reaction is to create content themselves. So everything is fragmenting, and even TV critics for major newspapers can’t get all the services available. Since this happens in nearly every expanding market, soon there will be a winnowing where services without enough content to get audiences will die and sell their content to the winners. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 6, 2018, 6:33am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/78 "2018-06-06T06:33:07Z")
> [@Hampshire](#): > > So nowdays if I have the urge on a Friday night to see some random hit movie from the 70s or 80s there’s pretty much nowhere to go to? > It’s not available to stream. Video rental stores are gone. Redbox only carries the new stuff. Neflix by mail I have to wait days to get it. > > I thought streaming was supposed to be this awesome thing that replaced Blockbuster? You wouldn’t be likely to get that movie from my Blockbuster store either. They had some, sure, but I spent many an hour in Blockbuster looking for something worth watching. I do that one every few months on Netflix DVD and build up a nice queue I don’t have to worry about. And for 30 entries maybe 4 are available on streaming. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [June 6, 2018, 6:38am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/79 "2018-06-06T06:38:27Z")
> [@Jophiel](#): > > Well, there’s a number of movies available to stream that just aren’t part of a subscription streaming package. Amazon, Vudu and other services offer streaming rentals. > > Agreed with the earlier people who pointed at Blockbuster’s late fees. Blockbuster never really had a ton of goodwill with people so much as they were often the only game in town. For a lot of people, they were best known for draconian late fees and charges. When Netflix said “Want to watch a movie a day? Cool. Want to sit on that DVD for six weeks? Also cool” that was a real selling point. That’s what did it for me. If you rented something from Blockbuster, you had to watch it right then and get it back on time. Netlfix, no problem. Which made them money since DVDs you sit on cost you more, but reduces your stress. Not charging postage for returns was brilliant. Mailboxes are going to be closer than video stores. I think people don’t remember what a thing Blockbuster hatred was. By the time Blockbuster had a DVD service their name was mud to me, anyhow. Much preferred the little stores, which had a more interesting collection of tapes and that porn room in the back. ---
**Author:** ![snfaulkner](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/snfaulkner/32/433_2.png) [@snfaulkner](https://boards.straightdope.com/u/snfaulkner)\ **Post date:** [June 6, 2018, 7:29am UTC](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470/80 "2018-06-06T07:29:09Z")
> [@Quintas](#): > > KODI Kodi’s a/v quality usually really sucks. And is questionably legal. Might as well go full darkside and go for torrents. [Previous page](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470.md?page=3) [Next page](https://boards.straightdope.com/t/why-wasnt-blockbuster-prepared-for-online-movie-streaming/815470.md?page=5)