Blockbuster screwed up several ways several times. It turned down extending revenue sharing on DVDs as had been the case on tapes, causing the studios to instead push into direct retail. It turned down buying NetFlix when it was cheap. It then tried to copy NetFlix's business model instead of playing to their own strengths. It made a pathetic push into IP VOD in a partnership with Enron, that cost too much for Blockbuster, cost too much for the end user, and had crappy selection and video quality. And they engaged in deceptive adverting about "no late fees", that pissed off their userbase.
Some interesting links: link, link.
