Skip to Content

Holy popcorn! Blockbuster to close up to 960 locations

Text SizeAAA

Filed under: Company News, Netflix, Blockbuster

More

File this in the horror section: struggling movie rental giant Blockbuster (BBI) said Tuesday it will close up to 960 stores by the end of 2010. If Blockbuster does hit that target, it will represent a 22 percent decline in the company's store count. Competitors Netflix (NFLX) and RedBox have flourished in recent months, but Blockbuster's massive fleet of cash-burning stores and its substantial debt load have made it impossible for the company to keep up.

Blockbuster had been pitching consumers -- and Wall Street -- on the idea that it could offer a unique value proposition by combining online and mail order DVD viewing with the convenience of renting movies in-store too. The problem? That benefit just isn't attractive enough to consumers to justify the cost of operating a chain of stores that are growing less relevant everyday. The decision to quicken the pace of store closings is an admission that this strategy isn't working.

The argument in favor of the news is, as Jon Ogg points out at 247WallSt.com, that most of Blockbuster's EBITDA (earnings before interest, taxes, depreciation and amortization) comes from a few stores, and that it can be more profitable as a smaller company. But that's true of any chain: the stores closed are always the weakest. The question is whether Blockbuster has any competitive advantage over Netflix and Redbox after it's closed a bunch of its stores.

All other things being equal, Blockbuster has one major disadvantage: a lousy balance sheet. And with nothing except "me too" ideas like rental by mail and DVD kiosks, it's hard to see Blockbuster existing as a meaningful part of the industry for too much longer.

http://xml.channel.aol.com/xmlpublisher/fetch.v2.xml?option=expand_relative_urls&dataUrlNodes=uiConfig,feedConfig,localizationConfig,entry&id=722089&pid=722088&uts=1253053994
http://www.aolcdn.com/ke/media_gallery/v1/ke_media_gallery_wrapper.swf
Tough Times for Blockbuster
Struggling video rental chain Blockbuster could close nearly 1,000 stores by the end of 2010. Click through the gallery to see which retailers have been forced to close their doors during the recession. Then take a look at those that are actually using this time to expand.
Eric J. Shelton, AP
Eric J. Shelton, AP

Reader Comments (Page 1 of 10)

Add your comments

Please keep your comments relevant to this blog entry. Email addresses are never displayed, but they are required to confirm your comments.

When you enter your name and email address, you'll be sent a link to confirm your comment, and a password. To leave another comment, just use that password.

To create a live link, simply type the URL (including http://) or email address and we will make it a live link for you. You can put up to 3 URLs in your comments. Line breaks and paragraphs are automatically converted — no need to use <p> or <br /> tags.

Interest Rates

5/1 ARM+4.06%APR: +3.75%
30 Yr.
Fixed Mort.
+5.03%APR: +5.16%
$30K
HELOC
+8.00%APR: 0.00%
30 Mo
New Car Loan
+6.77%APR: 0.00%
1 Yr. CD+1.57%APR: +1.58%
DailyFinance Writers
Melly Alazraki Melly Alazraki Financial writer and analyst
James Altucher James Altucher Financial columnist
Jeff Bercovici Jeff Bercovici Media columnist
Jonathan Berr Jonathan Berr Financial writer and media columnist
Mercedes Cardona Mercedes Cardona Retail reporter
Tim Catts Tim Catts Financial writer
Peter Cohan Peter Cohan Author, venture capitalist and financial writer
Carrie Coolidge Carrie Coolidge Financial writer
Lita Epstein Lita Epstein Financial writer
Sam Gustin Sam Gustin Technology Writer
Nikhil Hutheesing Nikhil Hutheesing Tech and investing editor
Joseph Lazzaro Joseph Lazzaro Markets and economics writer
Latif Lewis Michelle Leder Financial Columnist
Latif Lewis Latif Lewis Business news editor and management columnist
Anthony Massucci Anthony Massucci Senior writer and tech columnist
Doug McIntyre Doug McIntyre Business and investing news writer and editor
Michael Mercurio Michael Mercurio Managing Editor
Todd Pruzan Todd Pruzan Features editor
Michael Rainey Michael Rainey Editor and economics writer
Alex Salkever Alex Salkever Senior technology writer
David Schepp David Schepp Business News reporter
Matthew Scott Matthew Scott Investing reporter and editor
Dan Solin Daniel R. Solin Author, investment advisor and retirement expert
Amey Stone Amey Stone Executive editor
Bruce Watson Mark Svenvold Columnist, renewable energy
Russel Turk, M.D. Russell Turk, M.D. Healthcare policy columnist
Bruce Watson Bruce Watson Features Writer
my portfolios

Find out why more people track their portfolios on AOL Money & Finance than anywhere else.

Create a New Portfolio My Portfolios

Daily Finance Partners

More from the Weblogs Network