It was a cold winter morning in 2004. The scene was Stanley, Idaho, a city with a population of 101 and a current temperature of negative -17 degrees. My boyfriend, who had lured me here from London, England, handed me a bright red envelope. and asked if he could leave it in the mailbox on the way into town.
“What is Netflix?” I asked, looking at the white letters printed on the side. “It's a DVD sent in the mail,” he said. “They send you movies in the mail. You send them back when you're done. Then they send you another one.” It was a revelation.
While Netflix had been growing in the United States since its launch in 1998, it would not. cross the pond for another eight years. For the rest of the world, movie night in 2004 still meant a pilgrimage to the video store. As a kid in the '90s, I spent countless hours cross-legged on the floor of my local video store, scanning the rows of VHS cassette tapes in search of something new to fuel my movie obsession.
But those hated late fees consumed my limited pocket money as I stockpiled cassette tapes to watch multiple times. This new system (save a movie for as much as I would like without penalty, he felt revolutionary. What I didn't know was that a much bigger revolution was brewing.
Fast forward to 2024, and there is more “content” available to me on one device than in all the Blockbusters in London. I can access virtually any show or movie ever made anywhere with the push of a button (and possibly a credit card number). It's a far cry from the physical exertion of the pre-streaming era: countless trips to the video store, regular battles of will with the VCR to record each episode of Buffy the vampire slayerand decipher television listings in magazines and newspapers. (Much harder than it seems).
The shift from physical to digital media opened up a treasure trove for film nerds like me. Almost everything is instantly accessible, everywhere. Yet a pang of nostalgia for how it used to be remains. Sometimes a little more effort makes the reward much more enjoyable.
The Internet (and the birth of streaming video it enabled) changed everything about how we watch and even what we watch. But I would argue that the moment when video stores and physical media began to die came in 2004, with the birth not of streaming but of another mail-order DVD service: Online Blockbuster.
The world's largest video rental company, Blockbuster, was as much a cultural icon in the 1990s and 2000s as Netflix is today. Just as Barnes & Noble did with the independent bookstore, Blockbuster devastated small local video stores by stocking dozens of copies of the latest movies through shrewd negotiations with movie studios. (He convinced them to sell cassettes for $1 a copy instead of $65 each in return of a portion of rental income.)
Netflix, meanwhile, was a startup that had tried, unsuccessfully, to sell its movie-by-mail rental business to the big boys. In what has now become a warning taught in every business school, Netflix's Marc Randolph and Reed Hastings were literally laughed from the room by Blockbuster executives.
In 2004, Blockbuster had surpassed 9,000 physical stores in the United States and revenues of 5.9 billion dollars. But he was well aware of growing competition from Netflix, which now had a million subscribers. That year he launched Blockbuster Online. Then, it did the unthinkable: it eliminated its highly unpopular but wildly profitable late fees. Combined, these two moves cost the company $400 million. Within a year, he had lost 75 percent of its market value; within six, it was spoiled.
There are many theories as to why this happened, but Ousted Blockbuster CEO John Antioco says it wasn't the rise of Netflix that caused Blockbuster's fall; the company imploded from within. The problem started out of fear of competition, but Antioco maintains that Blockbuster could still have found success in the world of Netflix. Unfortunately, Blockbuster's main investor, Viacom, disagreed. He sold his 80 percent stake and set the company up for its downfall.
This leads to an interesting alternate universe theory: If Blockbuster hadn't panicked about the Internet and failed to pivot to streaming, could it have found a future where physical media was still relevant? As things progressed, the death of Blockbuster left a void in movie viewing that new and established companies jumped into, accelerating the shift from physical to digital. Netflix launched its streaming service in 2007, quickly followed by the founding of Hulu by NBC and News Corp, adding television shows to the streaming mix. In 2011, amazon-launches-prime-instant-videos-unlimited-streaming-for-pr.html”>amazon Instant Video (the precursor to today's Prime Video) arrived, and the rest, as they say, is streaming history.
Even what was left of physical media eschewed physical use and opted for the less expensive option of the United States Postal Service. Disney film club (which was released in 2001) grew in popularity by offering discs packed with bonus features, behind-the-scenes documentaries, and more for families to rewatch endlessly. When I had kids around 2008, they lured me into the billboard-style service with a bundle of free Disney DVDs and then locked me into a monthly purchase.
A rough estimate shows that I spent almost $600 on Disney movies during my children's formative years. (Anyone remember Disney Vault? Cool concept that made me spend a lot of money I shouldn't have spent.) The Movie Club finally closed earlier this year, and those DVDs are sitting in a drawer collecting dust now that I can stream almost anything on Disney Plus. While its streaming service didn't launch until 2019, Disney's late pivot to digital was the final nail in the coffin for physical media. Once the House of Mouse surrendered, the game was over.
But the Internet did not have to end the video store. If Blockbuster had handled its pivot more gracefully, something resembling that physical browsing experience might have persisted into the 2020s. Browsing Netflix doesn't compare to wandering the aisles in search of a hidden gem or tapping into the classic video store employee.
Obviously, like everyone else, I've happily traded in late fees and rewind reminders for a vast library of content I can access from my couch. It's a level of comfort that would have truly blown me away in that cold Idaho winter. But couldn't we have had both? I guess we'll never know. My local Blockbuster is now a wine bar.
