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Friday
Aug272010

Blockbuster Video to file for bankruptcy

Dark days are ahead for the once king of video rentals. Blockbuster Video plans to file for Chapter 11 bankruptcy in the middle of September in an attempt to manage roughly $1 billion in debt and get out of leases for hundreds of its rental stores. Blockbuster has lost more than $1.1 billion since 2008 and has closed 1,000 stores in the last year. 

The move comes after the chain was delisted from the New York Stock Exchange in July for failing to keep its stock price over $1 and the silly launch of DVDsByMail.com, a re-branding of its failed Blockbuster Express service, intended to compete with Netflix. 

The company is not throwing in the towel, however. According to the LA Times, executives have met with six of the major Hollywood studios to ensure that the video chain doesn't lose its supply of new DVDs and Blu-rays when the bankruptcy happens. The company hopes to increase growth and stave off another competitor, Redbox, by placing more $1 rental kiosks in stores like Walmart and other high traffic areas around the country. Redbox and Netflix have devastated rental store sales for the aging giant.

Blockbuster isn't the only rental chain in trouble. Movie Gallery Inc., parent to Hollywood Video, went out of business in April. Blockbuster was worth $8.4 billion in 1994; now it is worth $24 million. A true sign of the times. 

What do you think about the rental wars? Will we even be renting videos in five or 10 years?

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