Blockbuster Reportedly Mulling Chapter 11 Bankruptcy

Now that anyone with high speed Internet and/or cable or telco television service can order just about any movie or television program they want, on-demand -- not to mention the ability to have DVD movies delivered to your mailbox via services such as NetFlix, as well as the increasing prevalence of video kiosks -- what’s the point in getting in your car and driving to get a rental DVD movie from a retail outlet?


That’s exactly why Blockbuster, the biggest and best-known retail movie rental chain with more than 5,000 stores worldwide (9,000 at its apex), says it is mulling the idea of filing for Chapter 11 bankruptcy. After several years of watching its retail business become thoroughly ravaged by the advent of on-demand video, much of it now available for free, the Dallas, Texas-based company has reportedly mounted more than $1 billion debt and is now closing stores left and right. It recently announced that it is putting its European division, including 650 stores in the UK and more than 5,000 staff, up for sale in an effort to raise cash.

While it’s true that Blockbuster offers its own online DVD rental service in the U.S. to compete with Netflix, it apparently has not effectively marketed that service, which it launched in 2004, as NetFlix has become the leader in DVD rental services with about triple the number of subscribers. Some have speculated that Blockbuster's move to the online business model was hindered when Netflix in 2006 brought a patent infringement suite against Blockbuster -- Blockbuster counter sued but ultimately both suits were settled out of court in 2007. Blockbuster tried everything it could to maintain its retail business but in the end it just didn’t work out – operating retail stores while trying to stay in the highly competitive online video market no longer makes economic sense.

To read more, check out this AP report.