James Surowiecki has an interesting piece in The New Yorker explaining why Blockbuster -- originally one of the category killer stores that eliminated all independent competition and freckled American suburbia with its presence -- finally admitted the inevitable and rolled over and died.
What happened? Apparently Blockbuster, which in previous years had made a fortune with its brick-and-mortar stores and insisted on this business model, didn't think the Internet was that big of a deal. But when Netflix and Amazon began to offer an insanely huge variety coupled with the ability to keep a movie for as long as you wanted while giving its customers some useful advice via a Recommendation Engine, Blockbuster began to lose its place as the only alternative customers had.
The coup de grâce? It was finally delivered by Redbox, when it began offering new Hollywood releases for just a dollar.