The once high-flying video rental chain has filed for Chapter 11 bankruptcy in a move that for years has been seen as nothing but inevitable.
Chapter 11 is not the doom-and-gloom kind of bankruptcy, though. Its stores, kiosks, digital platforms, etc will remain open and in tact. However, as part of the bankruptcy plan many of its stores will be shut down and it will be forced to look at ways to reduce its substantial debt.
Blockbuster used to be a household name. Families across the country made it a weekly ritual to go to the store and pick out movies and snacks for a night at home. But then digital cable arrived, allowing viewers to watch movies from home on demand. However there was still a market for those who preferred physical discs and a wider selection. That’s when Netflix stepped in, offering DVDs through the mail in an ingenious, user-friendly process.
But, there was still nothing that literally let you comb through years worth of movies, pay for a rental, and watch it that night. Oh, yeah, wait. That only lasted until Netflix launched its instant streaming service, seen by many as the final death knell in Blockbuster’s coffin.
Blockbuster has tried to remain relevant in the world of digital distribution. It has its own movie download service but that requires users to pay for each title unlike Netflix’s “all you can eat” subscription model. It also has in-store kiosks to compete with another rival service, Redbox. But it has bee unable to attract anywhere near the same attention as Redbox or Netflix on either front. Additionally, it still has thousands of brick-and-mortar locations across the country that cost a lot to operate and have continuously decreasing returns.
According to numbers reported by the LA Times, Blockbuster owes the most money to:
– 20th Century Fox: $21.6 million
– Warner Bros: $20 million
– Sony Pictures: $13.3 million
– Walt Disney Studios: $8.6 million
– Universal Studios: $8.3 million
– Lions Gate: $7.9 million
CEO Jim Keyes had this to say in a statement:
“The recapitalized Blockbuster will move forward better able to leverage its strong strategic position, including a well-established brand name, an exceptional library of more than 125,000 titles, and our position as the only operator that provides access across multiple delivery channels — stores, kiosks, by-mail and digital.”