Blockbuster Files for Bankruptcy
The once immensely popular video rental chain Blockbuster has finally tossed in the towel by filing for bankruptcy on Thursday. The company hopes to reduce its burgeoning debt as it strives to compete with Netflix, Redbox, Amazon and other online video outlets.
Blockbuster has been in trouble for quite a while, bleeding red ink, closing retail outlets, and struggling with ideas to revitalize its business. The company has tried to strengthen its digital delivery service and add automated rental kiosks. However, the company has not been able to successfully compete with more flexible companies that weren’t burdened with the immense overhead associated with a bricks and mortar retail operation comprised of hundreds of stores.
Blockbuster soared in popularity during the 1980s and 1990s. Customers could visit their video rental stores and browse for movies and video games to take home. The once successful business model started to fail, however, when new entities like Netflix started supplying movie rentals through the mail. Blockbuster’s problems continued to mount even though it made its own belated entry into the rental by mail business.
Bankruptcy does not necessarily mean the Blockbuster brand will vanish. Blockbuster hopes to use bankruptcy protection to cut its over a billion dollars in debt by nearly 90 percent. It will probably later emerge as a considerably smaller operation.
The company intends to keep its kiosks, mail and online services, as well as a smaller group of retail stores open. They also plan to continue to add new movies to inventory.
The company’s creditors hope that Blockbuster’s more streamlined operation will be able to stave off additional gains by their competitors.
