Blockbuster files for Chapter 11 bankruptcy
been on the brink of financial insolvency for years, and yesterday the movie rental chain finally pulled the plug and filed for bankruptcy in New York.
The 25-year-old company has suffered in recent years from competition from Netflix's mail-order movie service and Coinstar's Redbox DVD rental kiosks. Revenue dropped 20 percent to $4.06 billion last year, when Blockbuster reported a $558.2 million net loss.
As of Aug. 29, Blockbuster had about 5,600 stores worldwide, including 3,300 in the U.S., according to court papers. In the past two years, Blockbuster has closed 1,061 U.S. company-operated stores.
What does this mean for you? Not much right now. All of Blockbuster's U.S. operations, including stores, DVD vending kiosks, mail and digital, will continue to operate normally for the time being. But Blockbuster's James Keyes says he will be evaluating every store as the chain reorganizes to compete with its competition.
Movie Gallery, which once had as many as 4,800 locations, filed for bankruptcy in 2007 and closed more than 1,700 stores. After reorganizing, the chain closed another 715, before filing a second bankruptcy in February and liquidating.
As of Sept. 19, there were about 6,600 Blockbuster kiosks throughout the U.S; those will continue to operate.
Blockbuster dropped 22 percent to 4.3 cents yesterday in over-the-counter trading. The stock has plunged 94 percent this year.
