BLOCKBUSTED
How a 30 year old assumption created the Blockbuster behemoth
by picking Hollywood's pockets.
By Hank Mitchell
March 5, 2008
An entire industry built around a simple mistake: Hollywood's inability to recognize the simple economics of value.
The rental industry essentially corrects this mistake and makes a huge profit that should be enjoyed by the producers themselves. |
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The year was 1980 and first video players were gaining popularity. A new form of home entertainment had been created. Suddenly the average family could watch Hollywood hits in the comfort of their own homes, anytime they wanted, as many times as they wanted. It was indeed a revolutionary change for the film industry and consumers.
Early adopters paid a stiff price with machines north of $1,000 and individual movies priced at $100-$200 to purchase. For those who were in love with the technology it was an easy decision. The price was high, but it was worth it for a sexy new technology. Everyone assumed owning a Hollywood hit would be a privilege with a high price tag. Superman and Tootsie were multi-hour well-acted epic sagas, not just some BEE GEEs record or a paperback novel. The price was fair and the value was there.
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