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In a posting on Hacking Netflix it states:

We had the option to buy Netflix for$50 million and we didn’t do it. They were losing money. They came around a few times,” he recalls. Instead, in 2000, Blockbuster inked a 20-year exclusive video-on-demand pact with Enron as the energy conglom launched into telecom. Blockbuster canned the pact after nine months. Netflix is now worth $1.4 billion. Blockbuster’s market cap is about $850 million.

Its quite interesting to hear about what companies had the opportunity to do in the past. But I think overall it was better for the consumers that Blockbuster didn’t buy Netflix. With having more than one retailer in the market to offer online DVD rentals, its made the market more competitive. As a result, the consumer has choices where to go and it gets the companies to drop their monthly subscription prices to lure customers.