Netflixed: The Epic Battle for America's Eyeballs

by Gina Keating

Losses of $57.4 million loomed in 2000, so Hastings and McCarthy decided to approach Blockbuster again to try for an alliance that would give Netflix a ready source of customers and a link to an established rental brand. It was a bit far-fetched, McCarthy thought, but he admired Hastings for having the guts to pitch it to the company they considered their top rival. Hastings got a call, during a staff retreat in the faux Dutch town of Solvang, that his contact at Blockbuster, Ed Stead, was ready to meet. He boarded a rented private jet that belonged to former game show hostess Vanna White early the next morning, along with McCarthy and Randolph, and flew to Dallas. The summons was unexpected, and none of them had brought business attire along to the retreat. John Antioco stopped in for a few moments to shake hands with them all at the glass-and-steel Renaissance Tower in downtown Dallas, and made a crack about McCarthy’s Hawaiian-style shirt and jeans. McCarthy still retained enough East Coast banking decorum to feel slightly mortified. Hastings laid out his proposal: Why not turn Netflix into an online arm of Blockbuster? The win-win, as he saw it, was that Blockbuster would be spared the expense of converting its huge VHS inventory to DVDs and Netflix would get access to Blockbuster’s twenty million active store users, and pay a fee for the privilege. Netflix would concentrate on back catalog and niche films, leaving Blockbuster with the new-release trade that made up ab...