Under Huizenga, who didn't even own a VCR when he took over, the chain flourished. By 1990, 1,500 stores had sprung up, forever altering cultural habits - and the economics of the movie business. "Nothing that happened in the 1980s compares to the videocassette revolution," hyperbolized New York Times critic Vincent Canby in 1990. "Movies will never be the same again." And consumers loved the change: In one survey, they ranked renting movies second for "best value for the money." (The winner: chicken.) In 1993, the company was already generating more revenue than its next 300 competitors combined, renting 10 million tapes a week to 30 million families. It now boasts that 75 percent of the U.S. population lives within 10 minutes of one of Blockbuster's 5,191 stores.
Still, naysayers kept predicting that Blockbuster would lose out to cable and, eventually, to video-on-demand. "We're not afraid of technology," Huizenga said in 1993, introducing the company line that has never gone out of style. One of its internal reports from the early '90s, devoted to the looming fight between tape rentals and video-on-demand, was called "the battle that isn't happening."
The battle that was happening had more to do more with Blockbuster's own missteps. Huizenga sold the company in 1994 to Viacom, which used Blockbuster's healthy cash flow to buy Paramount. But the business began struggling: The chain started selling things like T-shirts and potato chips that quickly turned into flops. It also sparked massive staff turnover when it moved its corporate headquarters from Florida to Dallas, hiring three CEOs in the space of a year. Antioco came on board in June '97 with a mandate to turn the business around.
Credited with reviving Circle K convenience stores, Antioco is far more animated talking about customer service than fiber-optic lines. When he came to Blockbuster, he says, one fundamental aspect of its customer service was "a joke": The chain was so incapable of meeting demand on hit movies that it didn't even market them for weeks. Antioco's solution was to overhaul Blockbuster's deals with the studios. Forget having to pay big fees up front for the tapes. Antioco pushed for Blockbuster to buy the movies at a steep discount and then share its rental revenues with Hollywood. After more than a year of negotiations, the studios finally signed on.
Blockbuster didn't invent this revenue-sharing arrangement, but institutionalized it on a large scale. (Says one Hollywood insider on whether studios get their fair share from the deals: "How much is ever enough?") Consumers now find endless rows of top-10 movies, and Blockbuster's clout has only increased. Today, the studios make nearly $10 billion, or 55 percent of their domestic revenue, from home-video rentals and sales. Blockbuster now dominates 36 percent of the video-rental market. "It's like Wal-Mart," says one studio insider of Blockbuster's mass-market muscle. "It's creepy."
If the last few years have shown anything, it's that revolutions require more than talk. Video-on-demand is yet another of those ideas that was supposed to change the world, but is off schedule. "Less than a year ago, people were projecting the demise of retailing, that the world would be e-commerce. What happened?" asks Antioco, who can't conceal his satisfaction. Today, industry players circle video-on-demand as if it were a pinata: eager for the treats they know are there, but blind and clumsy in their approach. No one wants to cede any ground or strike the wrong deal. The agreement between Blockbuster and Enron, which has been building a broadband business, was supposed to be exclusive and last 20 years; it didn't last 10 months.
