The rise of the Internet in the 1990s and 2000s rapidly created new markets. Companies like Apple seized on the ability to distribute music online for a lower price than independent record stores, or even large-scale ones like Tower Records could afford, driving record stores to near-extinction. A similar fate has fallen upon the video rental stores. Giants Movie Gallery and Blockbuster, driven by physical rental stores, began struggling to compete with streaming and mailing platforms. Both were driven into bankruptcy because they failed to adapt quickly enough. A series of poor choices by Blockbuster, including passing on the acquisition of Netflix for a mere $50 million, led the company to file Chapter 11 to reduce its roughly one billion dollar debt. This paper tells the story of Blockbuster’s venture into and through bankruptcy in an attempt to reclaim its place in the video rental world.
Davis, Todd and Higgins, John, "A Blockbuster Failure: How an Outdated Business Model Destroyed a Giant" (2013). Chapter 11 Bankruptcy Case Studies. 11.