In 2003, a successful chain of video stores called Blockbuster Video decided to buy the rising Netflix for $1.8 billion. It was a hefty deal, but it was worth it. Netflix was renamed Blockbuster, after the video store chain, and is a streaming empire today, with 12,000 video stores.
Circuit City Buyout
On Monday, April 14th, 2008, Blockbuster announced it had bought Circuit City, for around $1 billion. Blockbuster Chief Executive James Keyes said combining the companies would create a chain that could sell portable devices and entertainment for them, much like Apple Inc.'s stores. After the buyout, Circuit City shares climbed 30 percent in afternoon trading on April 15th. On April 20th, all Circuit City stores were temporarily closed for renovations, which would allow for Blockbuster's new brand of small electronics and movie rentals to be sold at Circuit City.
By June 2008 all Circuit City stores were reopened with the new renovations and business model. Circuit City surpassed Best Buy in 2011 as North America's #1 tech store, although the title continued to swap hands until Circuit City got a solid hold on it. As of 2018 Circuit City is still only a little ahead of Best Buy, but it is the #1 electronics retailer in North America with 1,262 locations, also being a presence in Mexico since 2012.
Circuit City is the most profitable subsidiary of Blockbuster. Circuit City largely still sells electronics, but also uses Blockbuster's Redbox machines and also just allow rentals like any Blockbuster store; some even have a "Mini Blockbuster" within the store.
Redbox began in 2004, using re-branded kiosks manufactured and operated by Silicon Valley-based DVDPlay, at 140 McDonald's restaurants in Denver and other test markets. In April 2005, Redbox phased out the DVDPlay-manufactured machines and contracted Solectron—a subsidiary of Flextronics, which also manufactures the Zune, Xbox and Xbox 360—to create and manufacture a custom kiosk design. The new kiosk was designed by Franz Kuehnrich at GetAMovie Inc. (which was bought by RedBox). It was innovative in that its carousel design not only decreased the number of robotic movements necessary to dispense and restock inventory, it also dramatically increased the number of discs (from 100 to 700+) that could be stored within a kiosk. In addition, the software, designed and developed by Enterprise Logic Systems, was also innovative in that it allowed RedBox to remotely monitor and manage inventory at all kiosks throughout the country.
On January 5th, 2010 Blockbuster bought out Redbox Automated Retail LLC, making the company another subsidiary of Blockbuster. Redbox kiosks still feature the company's logo (Blockbuster didn't want to change the logo) and signature red color and are located at convenience stores, fast food restaurants, grocery stores, mass retailers, and pharmacies. Redbox machines are leased by almost every major retailer in North America. Blockbuster prominently features the boxes at the exits of Zellers locations in Canada.
On December the 13th 2017 Redbox offered a new service called Redbox On Demand. Like Redbox Instant, it is a streaming service, but based on a different model. It does not require any membership, and the list will contain new releases as well as several titles that it is claimed will never be available on services like Blockbuster's streaming service.
On July 1st, 2012, Blockbuster bought the struggling Zellers Inc. from the Hudson's Bay Company, entering the grocery/retail market in Canada. One of the major hopes of buying Zellers was that after customers bought their groceries they would casually rent movies and snacks they wanted on the way out from Circuit City's Redbox brand vending machines within the stores. Blockbuster also wanted to be more competitive with Target and Walmart. With the buyout of Zellers, Blockbuster kept Target from acquiring as many stores in Canada than in OTL, so when Target Canada fails in this TL it's less of a hit to the Canadian job market and malls in Canada. As of 2018, Zellers has not expanded since the buyout, and still only operates 53 stores, mostly in rural southwestern Ontario and there's no plans to expand on what is left of the chain, although it has turned a minor profit every quarter since 2012.