Blockbuster May Shut Retail Stores

Once Goliath to Netlflix's David, Blockbuster appears on the defensive in an effort to stay relevant to movie fans and viable as a business. In a filing with the U.S. Securities and Exchange Committee Monday, Blockbuster stated it may have to permanently close its retail stores. The company recently took out a $250 million loan -- on top of its $780.9 million debt -- and does not know if it can meet the conditions of the loan.

Blockbuster said it has "substantial doubt" about continuing as a "going concern." A going concern is business jargon for the ability to continue as a functioning business that is not forced to liquidate its assets. The company operates 7400 stores globally, which spells bad news for Blockbuster employees and brick-and-mortar movie rental mavens.

Blockbuster did not fare well in a battle against DVD-by-mail powerhouse Netflix, mostly because it was late to join the innovative distribution method and invested too much time and money in other endeavors, such as a set-top box. Netflix has no retail store overhead expenses compared to Blockbuster which must keep the lights on at thousands of brick-and-mortar stores and pay retail staff.

Blockbuster is also facing competition from upstarts such as Redbox Automated Retail which operate self-serve DVD rental kiosks in retail locations such as grocery stores.

While many may be sad to lose the "convenience" of entering a Blockbuster store and choosing that night's rental, more have chosen Netflix, one of few companies in this recession that posted a Q4 profit, leading many to believe Netflix is recession-proof. From the looks of its numbers, and its own grim outlook on the situation, I'm betting Blockbuster closes sooner rather than later.

Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
You Might Also Like...
See It, Share It
PHOTO: The fake baby a man was carrying as he and another woman tried to sneak into the mother and baby unit at Mercy Medical Center in Merced, Calif., hospital officials said.
Dignity Health Security/Mercy Medical Center Merced
Leopard Cub Chills in a Basket
Odd Anderson/AFP/Getty Images
In this image from video posted on Facebook, courtesy of the George W. Bush Presidential Center, former President George W. Bush participates in the ice bucket challenge with the help of his wife, Laura Bush, in Kennebunkport, Maine.
(Courtesy George W. Bush Presidential Center/AP)
PHOTO: Left, actor/comedian Robin Williams arrives at the premiere of Monty Pythons Spamalot in this March 31, 2007, file photo; right, actress Mila Kunis arrives at the Los Angeles premiere of Third Person at Pickford Center for Motion Study.
Ethan Miller/Getty Images| Axelle/Bauer-Griffin/FilmMagic