Blockbuster Video

From Academic Kids

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Blockbuster logo

Blockbuster Video, headquartered in Dallas, Texas, USA, is the name of the largest chain of video tape, video game and DVD rental shops in North America, with shops in countries like Canada, the US, the UK, Australia, and Taiwan.

Blockbuster's first store opened on October 19, 1985, and was grown into a multi-billion dollar company by Wayne Huizenga, until it was sold to Viacom in 1994. Blockbuster left Viacom at Viacom's request on October 13, 2004 and continued on its own.

In 2003, Viacom said that it has 4,971 U.S. locations and 2,405 international locations, with more than 43 million U.S. households with Blockbuster memberships.

As of 2004, Blockbuster decided to withdraw from Hong Kong, where it cannot compete with VCD shops, both local ones and those across the border within Shenzhen. On May 19, 2004, Blockbuster acquired Rhino Video Games in an effort to compete with GameStop.

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Blockbuster franchise in Porto, Portugal

In 2004, Blockbuster introduced their DVD rental service by mail to compete with other online DVD rental providers such as Netflix. In addition, Blockbuster rolled out Blockbuster Movie and Game Passes, which allow customers to watch all the movies or games they can for a monthly fee (although they limit the number of movies or games a customer can have out at any one time).

At the end of 2004, Blockbuster publicly stated that it plans to acquire its competitor, Hollywood Video, in a hostile takeover. According to press releases, they plan to offer $11.50 per share for Hollywood Video stock directly to shareholders. On March 25, 2005, Blockbuster announced that its offer to acquire all of the outstanding shares of Hollywood Entertainment Corporation expired in accordance with their terms at midnight, New York City time, on March 24, 2005.

“Our decision not to extend our offers was reached after a careful review of all of the available facts and circumstances. Among those things that played prominently for us were Hollywood’s recent public filings and the unlikely resolution of our request for regulatory clearance on an acceptable timetable. Given the current circumstances, in our judgment it is not in Blockbuster’s best interest to continue to pursue the acquisition,” said John Antioco, Blockbuster Chairman and CEO.

Blockbuster also rolled out in-store Game Rush locations that provide a wide variety of games and systems, from the Nintendo Entertainment System to the modern PlayStation 2, Xbox and GameCube systems. Game Rush locations tend to offer special deals on game trading that seem to be focused on improving their inventory of used games rather than trying to actually cut a profit.

As of January 1, 2005, Blockbuster has revamped its rental policies under the program name "No Late Fees." This created a confusing return policy situation which instigated a lawsuit, detailed at the bottom of the article. This policy only is valid in certain stores, as some Blockbuster locations are franchised, and the "No Late Fees" program is a corporate policy.

The company has a large Irish subsidiary, Xtravision, which has never changed to using Blockbuster brand.

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Tippett ad for Blockbuster

Concerns and Censorship

Blockbuster's massive international permeation and domination of the video market has placed certain business practices under scrutiny. Critics of the chain, including Naomi Klein in her anti-globalization book No Logo, say that they use their power to enact censorship - this accusation stemming from the fact that Blockbuster are reputed to edit videos for release beyond the standard retail cut, or at the very least use their significant market share to influence studios to edit in order to lower their certification and reach a wider market.

Also on the subject of censorship, on November 27, 1990, the MPAA introduced the NC-17 rating in order to distinguish non-pornographic adult material from 'X-rated' materials. Under pressure from the Christian organisation the American Family Association, headed by Rev. Donald Wildmon, Blockbuster decided not to stock NC-17 titles. The AFA also successfully campaigned against films such as The Last Temptation of Christ.

Further criticism is that their business model has led to a dilution of availability. The standard model for video rental stores was that they would pay a large flat fee per video, approximately US$65, and have unlimited rentals from the lifetime of the cassette itself. The new system, controlled by the distribution company Rentrak, and perhaps influenced by the studios due to the smaller space constraints and longer shelf-life of the DVD format, is based on royalties. Blockbuster obtain videos for little or no cost, and takes approximately half of the rental fee, paying the other half back to the studio and to Rentrak. Under this model, there is little incentive to purchase movies that have enduring interest for fewer people. Riding on the hype generated by the vast marketing campaigns of Hollywood blockbusters, they fill their shelves with multiple copies of the same brand-new film, which may have a shelf life of only 2-3 months, and combine this with a promise that the video will be in stock or you rent it for free the following time. This often leads to shelf-saturation, where there may be 50 copies of the latest hyped movie available, yet little, if any, older or foreign movies.


In February 2005, Blockbuster came under fire for its "No More Late Fees" advertising campaign. New Jersey's Attorney General Peter C. Harvey filed a lawsuit claiming that the advertisements are deceptive and constitute fraud against the customer. The campaign states that Blockbuster have abolished late fees on all movie and video game rentals. What is not made apparent, without reading a separate brochure on the issue, is that following a 7-day 'grace period', the customer is automatically charged with the full price of the DVD. If they still wish to return the DVD within a further 30 days they will be charged a 'restocking fee' of $1.25 to $4.50. What the new scheme essentially means is the customer may consider the rental period to be 7 days longer than stated, and the late fee is that the customer must buy the item. There are other complaints cited in the lawsuit, including that although all stores carry the advertisements, not all stores are actually carrying the promotion, and that the advice offered by store clerks regarding the scheme is far from consistent or correct. Blockbuster was firm on its stance that it was not misleading customers, and that New Jersey should have addressed the issue with them first before filing a lawsuit.

Blockbuster settled on March 29, 2005, and agreed to pay $630,000 to 47 states that threatened to sue. They also agreed to refund clients who were charged the full price of the DVD when it was not returned after the 7-day grace period, providing they returned the item and signed a contract saying they understood how the late fees program works.


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Tippett ad for Blockbuster

One of Blockbuster's most well known advertising campaigns was launched during the 2002 Superbowl. It starred the voices of Jim Belushi and James Woods, as a rabbit and a guinea pig in a pet shop, located across the road from a Blockbuster store.


  • "Wow! What a difference!"
  • "Make it a Blockbuster Night."
  • "Let the good times roll!"
  • "Go home happy."
  • "Bringing entertainment home."
  • "The end of late fees. The start of more." (Note that FRANCHISE Blockbuster locations are NOT all taking part in this promotion, despite the presence of television advertisements.)
  • "Feel The Rush" (Note: Only applies to special "Game Rush" stores)

See also: Blockbuster (general meaning of the word)

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