It’s curtains for Blockbuster.
Blockbuster (Stock Quote: BBI) will file for bankruptcy in mid-September, sources familiar with the situation told the Los Angeles Times. The company’s goal, according to the paper, is not to shut down the stores for good but rather to restructure their mountain of debt and shed hundreds of stores losing money. In fact, Blockbuster hopes to continue doing business even during their period of bankruptcy.
“Blockbuster is hoping to use its time in Chapter 11 to restructure a crippling debt load of nearly $1 billion and escape leases on 500 or more of it (sic.) 3,425 stores in the U.S.,” The LA Times reports. “Maintaining the support of Hollywood's film studios during the process will be critical so that Blockbuster can continue to rely upon an uninterrupted supply of new DVDs.”
For years, Blockbuster has been suffering financially and the situation has only worsened recently. The company has lost more than $1 billion since 2008 and last year alone it closed more than 900 stores. Many publications, including this one, have placed it near the top of their lists of businesses that would likely go bankrupt in the near future.Perhaps the biggest thorn in Blockbuster’s side has been Netflix (Stock Quote: NFLX), an online video rental site that launched a subscription service in 1999 and has gradually built up a membership of more than 15 million users. This site not only made it easier for consumers to get their movies (there is now an instant streaming option so you can watch hundreds of movies on demand) but it also made it cheaper to rent movies. Over the years, renting a single movie at Blockbuster has cost anywhere between $3 and $5. By comparison, a monthly membership to Netflix now starts at just $9.
As our sister site TheStreet points out, Blockbuster had made many efforts in recent months to innovate and boost its business by introducing DVD kiosks in stores like Duane Reade, as well as adding more video games to its mailing service. These services are where Blockbuster reportedly hopes to grow its business after it emerges from bankruptcy.
Still, it’s hard not to think of this as the end of an era. Even if Blockbuster manages to maintain its presence as a national rental chain, the very fact that it’s on the brink of bankruptcy seems the ultimate indication that consumers have given up on brick-and-mortar video stores for good. Yet, for all the conveniences that come with an online video rental service, there are a few big things we’ll miss about Blockbuster in particular.