In 1977, JVC released the VHS VCR and Blay saw it was the perfect time to capitalize on his idea. His idea was to sell Hollywood films to the home market on videocassette tapes. Blay waited for the VHS VCR to arrive since the Betamax’s (that came out a year earlier) format only allowed for one hour of recording, while VHS had two hour tapes that could fit a whole Hollywood movie on one tape. He contacted all the major Hollywood studios, except for MCA/Universal and Disney who probably would take kindly to the letter because of the legal proceeding of the Betamax case. The problem was that video piracy was expanding where people would tape a movie off the television and then with two VCRs s/he could make multiple copies and sell them for pure profit. Pirated tapes were becoming common place in smaller countries outside the United States and the studio feared with the expansion of video technology this would only increase.

Only two companies responded to Blay's letter. The first was MGM who stated that they were investigating the VCR technology and were not interested at this moment. (Lardner p.169) However, the second letter from 20th Century Fox seemed enthusiastic by the idea. Fox in the 1970s was not doing well financially and selling videotapes seemed like a cheap way to make money without risking too much. Steven Roberts, the head of the communication part of Fox was interested and sold Blay the right to films that had already been on television. "We would use films that were already on commercial television," Roberts said "so I felt that we were risking very little, since anyone who wanted them could tape them off the air as it was. But now we were going to sell those films without the commercials, and unedited." (Lardner p.172)

In July 1977 the contract was signed it called for Blay to pay Fox an advance of $300,000, plus a minimum of $500,000 a year along with a royalty of $7.50 for every movie sold. For this price, 20th Century Fox gave Blay the choice of 50 out of 100 titles that were all released before 1973 and had been shown on television. (Lardner p.172) Blay naturally chose the films that had done well at the box office that included such titles as Patton, The French Connection, The Longest Day, Hello Dolly, M*A*S*H, Sand Pebbles, Seven Year Itch, Beneath the Planet of the Apes, Dr. Doolittle, Hombre, The Sound of Music, and Butch Cassidy and the Sundance Kid. (www.page.prodigy.net/lnicholson/fox.html) Already having the duplication machines, Blay was ready to sell his videos by October.

In order to advertise the Video Club of America, Blay took out a full-page advertisement in TV Guide for sixty five thousand dollars. (Lardner p.173) This investment worked out well since out of two hundred VCR owners, nine thousand joined the Video Club of America. Blay’s timing worked out well since the competition between Sony and JVC was becoming heated and VCR prices fell below $1,000 and by 1978 40,000 cassettes had been sold. By the end of 1978, the Video Club of America had sold a quarter of a million tapes and was producing thirty thousand a week. (Lardner p.175) This caught the eye of 20th Century Fox who bought the Video Club of America for 7.2 million in November 1978.