Bloomberg Series Reveals How Netflix Needed Blockbuster ... Until It Killed Blockbuster

Former Blockbuster CEO John Antioco and Netflix founder Reed Hastings

​Blockbuster, says a new 30-minute doc, was once "900 times the size of Netflix." Now, it's...well, you know the story. It's barely anything at all, except something owned by Dish Network, which hopes to use Blockbuster's by-mail service to lure new customers. It's a sad story, the felling of a giant that began with a single store at Skillman and Northwest Highway in 1985, when David Cook opened the very first store at the behest of his wife. But Netflix and then Redbox left it...blockbusted.

It's a tragedy that didn't have to result in this ending, if one is to believe the latest episode of Bloomberg's Game Changers series, which hit the virtual airwaves last night, receives its first look-see today courtesy CNET's Greg Sandoval and follows on the other side. Because, as you'll see, Blockbuster had several chances to either partner with or sell out to Netflix. Says the show, in 2000 Netflix's revenues were a fraction of a fraction of a fraction of Blockbuster's, which is why Netflix's Reed Hastings met with then-Blockbuster CEO John Antioco about becoming "a strategic partner and investor" in Netflix, which the show describes as "a bold and clever move."

Only, Antioco says, "We thought if we're gonna get into this business, we shouldn't give the Internet rights to another company for a couple of percentage points." And so Blockbuster kept "evaluating" whether or not it wanted to get into the by-mail business -- which it finally did, by which time it had become too late. A price war between the two, and Walmart, appeared to hurt Netflix. Analysts wrote it off as dead, a victim of Blockbuster's size, if nothing else.

But in '05 Walmart got out of the by-mail business, turn over its customers to Netflix; meanwhile, Blockbuster, so tethered to its brick-and-mortar outposts, couldn't figure out how to make money off the by-mail business. So in '07 Hastings and Antioco met secretly at the Sundance Film Festival, with Netflix offering to "buy Blockbuster Online, and what we proposed back was a merger," Antioco says. But that went nowhere out of anti-trust concerns, and in '08 Antioco was out, Jim Keyes was in, and Blockbuster was on its way to the graveyard.

The horror movie follows.