For many of us who came of age between the late 1980s and early aughts, Blockbuster Video is a pleasant memory. For roughly two decades, Blockbuster was a dominant force in the video rental industry. But despite this dominance, Blockbuster declared bankruptcy in 2010 and instead of operating 9,000 stores like it did in 2004, now it has only one. There are parallels between Blockbuster’s demise and what’s likely to happen to traditional banks. The effects of COVID-19 have only strengthened the comparison. Banks are having their “Blockbuster moment,” and it could cost them big.

Blockbuster’s heyday
Most of us probably remember going to Blockbuster Video years ago. On a Friday night, it was the place to go pick out the video you were going to watch. I have fond memories of browsing the aisles (and rushing to check out the new releases shelf) at my local Blockbuster as a teen, and you probably do, too. You could take any movie home with you for just a few dollars.

Blockbuster had 9,000 retail locations at its peak, and these stores were a key part of their business model. Blockbuster stores were seemingly everywhere, making it easy to find a convenient one to visit. Of course, these stores cost money to maintain – but Blockbuster had ways of paying for that. Late fees were a big source of revenue. While consumers hated paying them, late fees helped the company afford the large costs associated with maintaining 9,000 stores.
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