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Back when I managed a Blockbuster Video, most stores ran at a loss thanks to theft.
The real reason most stores failed wasn't because DVDs were going out. It was because we couldn't stem the flow of money out the door thanks to thieves.
Did they have the actual disc on the shelves? Where I'm from the rental places only displayed the cover, then you picked up the disc at the counter. Not sure how theft would've been a big problem then?
I suspect it was not returning the DVDs. I'm not from the USA but recall hearing blockbuster wiped all their late fees..