Blockbuster Files for Chapter 11 Bankruptcy Protection
Looks like those rumors about Blockbuster declaring bankruptcy in September were true. Today, the company announced that it has filed for Chapter 11 bankruptcy in an effort to stave off its more than 1 billion dollars in debt. Blockbuster promises that its stores will continue serving customers, however.
All of Blockbuster’s U.S. operations, including its stores, DVD vending kiosks, by-mail and digital businesses, are open and serving customers in the normal course. Blockbuster is fulfilling all orders as usual, including continuing to provide access to new releases the first day they become available. Blockbuster intends to continue honoring its Rewards program, valid coupons, gift cards and other customer programs.
Blockbuster franchise locations in both the U.S. and abroad are independently owned, operated and funded, and are also continuing normal business operations. In addition, BLOCKBUSTER Express vending kiosks, owned and operated through a relationship with NCR, continue their operations in retail locations around the U.S. The Company’s international operations in Canada, Denmark, Italy, Mexico, and the United Kingdom are also conducting business as usual. However, Blockbuster will no longer provide funding to support its operations in Argentina, which have experienced continued shortfalls in operating cash flow.
A lot has already been said about this by a lot of smart people; Bloomberg has the most comprehensive report on what this means on the business end, and Ars has a bit more from a consumer vantage. The succinctest summary we’ve seen yet is the above graph from The Consumerist, pitting Netflix’s rise against Blockbuster’s decline. In short: It’s increasingly tough to get people to walk into a brick-and-mortar store and shell out a lot of money on one rental which they’ll have to physically return, on top of which there may be late fees when people can just stream the same thing to their XBox for a flat monthly fee.
Of course, it hasn’t always been this way: Back in 1992, when this commercial was made, the promise of a store with “over 10,000 videos!” was enough for Blockbuster to boast that they had “the perfect video store.”
As the commercial itself puts it: “Wow, what a difference.”