Blockbuster Preparing To Declare Bankruptcy?

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Blockbuster, the American rental chain giant that dominated the home rental business since 1985 is preparing to declare bankruptcy. This is according to the Los Angeles Times, who cites people brief on the matter. According their sources, top executives from Blockbuster met with top executives from the movie studios and the banks who hold Blockbsuter’s debt and they discussed a “pre-planned” bankruptcy.

According to the LA Times, Blockbuster has some $1 billion in debt that it hopes to restructure. Also, it’s hoping to get out of the leases of 500 of their retail locations. Blockbuster currently has some 3,425 stores in the United States alone. Why were the movie studios involved? They need to keep them happy so Blockbuster can keep new releases stocked in their stores in the meantime.

Blockbuster – who’s been crushed by mail rental services like Netflix, kiosk rentals like Redbox, and the availability of movies online (both in legal and illegal fashions) – is telling the movie studios that when they come out of bankruptcy, they’ll come out stronger with non-retail solutions, like the aforementioned kiosks, mailings and streaming on the web.

Blockbuster seems to have been slow to adjust to the internet era, and now they’re getting trampled by it. Compare this to Netflix, who’s management admitted early on that eventually online streaming would replace their mail rental business.

Are you a big Blockbuster user? What do you think about it’s longterm viability? Tell us in the comments section.