Capital Punishment: The Death of Blockbuster

Legend has it that Netflix (Nasdaq: NFLX  ) founder and CEO Reed Hastings rented a copy of Apollo 13 from Blockbuster (OTC: BLOKA.PK) and was tagged with a $40 late fee. He went for a workout and conceived of the idea of renting movies via monthly subscription, similar to gym memberships.

At the time, in 1997, Blockbuster was a dominant multibillion-dollar company with massive brand recognition. Just 13 years later, the company inches toward bankruptcy, while Netflix sports a market cap of $6 billion. And this stunning transfer of wealth all began when a totally dominant company pissed off the wrong man at the wrong time.

Fool contributor Daniel Joshua Rubin posts to the boards as HollywoodDan and blogs regularly on CAPS. He holds no positions in any of the companies mentioned above, but recently realized gains of over 500% on Neftlix after discovering the stock by subscribing to Motley Fool Stock Advisor, of which it is a current recommendation. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.

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  • Report this Comment On September 10, 2010, at 11:02 AM, eFlatfooted wrote:

    Good start....where's the rest of the article???

  • Report this Comment On September 10, 2010, at 11:13 AM, BroadwayDan wrote:

    Hey eFlatfooted,

    The comic is the "meat and potatoes" so to speak of these posts. As you probably know, the Fool's mission is to "Educate. Amuse. Enrich." - These are primarily about amusement, but hopefully they do inspire some thought and passion for following the sport of business, and that will in a small and hard to quantify way, contribute to education and enrichment. Thanks for the kind words on the start. Best, DJR

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