by: Lauren Coffey
Before I delve into analyzing the transition from Blockbuster to Netflix & Redbox, let me first establish a timeline. The initial VHS was sold in 1956 - only 57 years ago! For the young readers like myself out there in your twenty-somethings, I know that 57 years sounds like a long time, but in the scheme of this particular timeline, it really is not long at all. Following the invention of the VHS, Blockbuster was established nearly 30 years later in 1985.
It didn't take long for the industry to change again. The first DVD was sold in 1995. I was two years old, essentially at the beginning of my life, and already my medium for viewing movies had switched from VHS to DVD. The invention of the DVD sparked a whole new revolution of viewing movies on computers and online. It didn't take long for companies to sprout up; Netflix was invented when I was four, in 1997. In 1997, Netflix was a great idea, but it was just that - an idea.
It took a few years for Netflix to gain recognition among consumers and investors. In 2002, Netflix went public. In the same year, Redbox was founded. The idea of Redbox vending kiosks was officially sold to McDonald's Corporation in 2003. Also in 2003 - Netflix experienced its first profitable quarter and subscribers topped 1,000,000. Simultaneously in the fateful year of 2003, DVD sales officially beat out VHS sales. Clearly, a major shift was transpiring. I was only ten years old, and so much change had already taken place.
Let's not forget about Blockbuster though. In 2004, the company reached its peak with nearly 60,000 employees and more than 9,000 stores. While Blockbuster did survive through the shift from VHS to DVD, the invention of Netflix, and the introduction of Redbox, it could not survive much longer. Coinstar purchased 47% of Blockbuster in 2005. As Blockbuster declined, Netflix inclined and Redbox expanded. I was twelve years old when I noticed my family no longer went to Blockbuster together to rent movies for the weekend.
Netflix ended its year in 2005 with 4.2 million members (a 60% increase from 2004). Simultaneously during 2005, Redbox expanded and spread to grocery stores, convenience stores, drug stores, and mass-merchant spots. Additionally, Redbox customers were now able to start reserving movies online through the company's website beginning in 2006. In 2007, Redbox rented its 38 millionth movie. In 2008, the company reached its 200 millionth. Also in 2008 - Netflix closed out its year with 9.4 million members. In 2009, Netflix ended the year with 12.3 million members. At the age of 16, I became one of those 12.3 million members. These two powerhouse companies were an unstoppable force grabbing the attention of at-home movie viewers.
Progress did not slow down in 2010. Redbox rented its 1 billionth disc and Netflix closed out the year with 20 million members. Unfortunately, this meant the irreversible demise of Blockbuster. In 2011, the Blockbuster company and its remaining 1,700 stores were bought, and 200 branches were closed. The destruction continued into 2012 - 500 more branches were closed in the first half of the year. At the same time as Blockbuster's downward spiral, America had rented more than 2 billion discs from Redbox (across 31,500 locations), and Netflix surpassed 30 million members globally. In 2012, Redbox and Netflix thrived, and I am part of the driving force behind that. I am only one consumers among millions, but by switching my medium for watching movies from home, I became part of this technological revolution.
I am 20 years old, and I have witnessed extreme change in culture and society. I realize I left out major contributors to this revolution, such as AppleTV and Hulu, but the general trend stands true. Technology is constantly changing, and society has to move with it. I don't even know where could purchase a VHS at this point, and I know the Blockbuster in my town shut down years ago. If I want to continue watching movies from the comfort of my home, I need to keep up with the ever-changing shift from one medium to another.
Sources: Company facts taken from each company's respective website