Posted Mon Mar 22, 2010 at 11:05 AM PDT by Mike Attebery
The video rental giant may have to file for Chapter 11 Bankruptcy, according to a recent SEC filing.
In its annual report, Blockbuster stated that it may no longer be able to continue without filing for Chapter 11 bankruptcy. The report stated that “increasingly competitive industry conditions" raise "substantial doubt about our ability to continue as a going concern.”
While Netflix and Redbox are taking a chunk of business from the company, it’s Video on Demand rentals that Blockbuster cites as the biggest competition. After a year where consumers rented more than ever – according to Sony co-chair Michael Lynton – Blockbuster lost nearly 20% of revenue.
As a reaction to the report, Blockbuster is planning to slash over $200 million in costs, including the closing of over 500 stores. After the 572 stores closed last year, another 500 will bring them down to 6,000 worldwide, and as few as 3,500 in the US.
Blockbuster will also attempt to adapt through imitation by increasing the amount of Blockbuster Express kiosks floating around.
This certainly isn’t the end for Blockbuster, but it looks like that end may not be far off. The days of leaving the house to rent a movie are over for a lot of people, and Blockbuster has been slow to adapt.
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