So I wouldn't even ask people if they wanted it, I'd just upgrade them and explain why. But....shouldn't that have been official policy?

Not even for a second. If any store tried to replace a one-time purchase I made with a year subscription that included their retaining my personal information, I would be PISSED. If you had done this to me at your store, I would try to get you fired for it. The same remains true today.

Has it ever occurred to you what Blockbuster did with the customer data they collected from members?

It was sold. Every Blockbuster member had their name, address, phone, email, purchase history, etc sold to an endless string of marketers who are still, to this day, trying to use that info to sell you more shit.