Blockbuster Teetering on the Edge while Netflix Forges Ahead
While Netflix continues to spread its presence on even more devices -- look for the streaming video service to shuttle onto the iPhone this summer -- one time rival Blockbuster is struggling just to stay in business. It's hard to call the two rivals anymore considering the sorry state the rental chain is in.
The latest victory for Blockbuster has nothing to do with one-upping Netflix or Redbox, but in winning a one-month reprieve on debt payments, Reuters reports. And even that comes with a caveat - the mega rental chain must begin delisting from the New York Stock Exchange.
After failing to make debt payments on July 1, Blockbuster said it struck a forbearance agreement with creditors holding some 70 percent of its 11.75 percent senior secured notes due 2014. Collectively, creditors are owed about $440 million, and they've agreed to hold off from exercising "remedies" until August 13.
"Six weeks is not a long time in a tough economy, where nobody has much credit," said Michael Pachter, analyst with Wedbush Securities. "There's nothing on the horizon that makes it look like Blockbuster is going to be more profitable."
Nevertheless, Blockbuster remains ever optimistic.
"The agreement provides us with additional time and flexibility as we continue to take steps to implement a more appropriate capital structure," said Blockbuster CEO Jim Keys.
More here.

Image Credit: cybertheater.com
Comments
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Roger_Steele
October 21, 2010 at 5:44am
IMO BlockBuster just didn't evolve fast enough. I live in a medium sized town in rural Alberta. Our population is around 8,000 and we likely service another 10,000 people in a 30 mile radius around us. Out here towns are 50 miles apart so we get pretty much all the business. 10 years ago we had 5 Video rental stores in town plus a few convenience stores rented movies and games out of their stores. Someone tried to bring Block Buster in but they were bought out by another local chain before they opened their doors. Last month the last Video Rental store closed their doors. With Netflix now streaming directly through Wii systems, Samsung TVs and BluRay players as well as any PC and I'm sure other systems, Video rental companies in general are dinosaurs. My only complaint with Netflix and it may only be in Canada is the selection of Movies that are offered. I'm not sure how long Netflix has been available here I do not believe it has been too long. We do not seem to get a lot of the recently released titles. I'm sure that will change with time. There are still a lot of movies and TV shows available and they are definitely doing things right!! I think they are even taking a bite out of Cable and Satellite companies.
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violian
July 05, 2010 at 3:44pm
I used to think that the whole Netflix thing would only catch-on with the younger generations because Netflix required having to go online on a computer to select movies and stuff. But I was wrong. My small town composes of mostly older people, and the one and only Hollywood Video Store finally shuttered its doors 2 months ago after more than 12 years. I think Redbox is Netflix's biggest contender. We have lots of Redbox's in our little town, and everywhere you go, there's always a line.
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admobadmo
July 05, 2010 at 11:36am
I imagine the creditors don't mind giving them a few more weeks, because they probably figure they're not going to get their money back anyway.
For my part, I see so many empty former Blockbuster locations around town now that I'm surprised they're still in business at all.
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chipmunkofdoom2
July 05, 2010 at 7:21am
Wow, I'm shocked... you mean the places that charge you $6 for a new release, want it back in 48 hours, and will then charge you haneous daily late fees if the movie is not back are getting pushed out business by a better, more consumer oriented business model?
You'll hear no complaints from me. If Blockbuster isn't smart enough to adapt and make themselves competitive, they deserve to go out of business. Capitalism demands it.
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Zallomallo
July 05, 2010 at 6:46am
Who knows, all this failure might make them realize what they're doing wrong and improve.
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dracx619
July 05, 2010 at 6:23am
i worked for bb for amost 2 years right after highschool and into college. cant say im not surpirsed. we were pushed so much to upsell so much crap it was ridiculous. even though i was their top seller, i hated it hated it, hated it! whatever, the store i worked it is now closed and others in the district will be closing soon...i can finally laugh at stick the finger the the jerk ass district manager who always gave me and my friends crap.
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americanpegasus
July 05, 2010 at 6:21am
We used to be happy Blockbuster subscribers, back when $17 got you mail-in service similar to Netflix, plus you could exchange movies in the store all you wanted. Hell, we would have even paid $20 or so for this. But then they changed our plan, told us we could only exchange one or two movies a month in store, unless of course we wanted to pay nearly $40/month. Bye. Hello Netflix.
THEN, just recently I went to check out a movie in store from them, only to find out they've BROUGHT BACK LATE FEES. Srsly? In this day and age, you will charge me if I'm a day or two late? What was so wrong with just charging me the whole movie if I didn't bring it back?
Go out of business and rot, you sorry, anti-customer, antiquated way of doing business. Netflix has moved light years beyond you, and you cannot catch up.
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dracx619
July 05, 2010 at 6:25am
absolutey. when they started the whole online thing, it was atctually free the first month then 10 bucks a month for 3 movies out and 1 coupon for a free movie at the store every week, oh, and you could bring in your online movies to the store and swap them out for any movie at the store. that was a steal! guesst hey couldnt afford it.
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mesiah
July 06, 2010 at 10:59pm
That was the plan I had, and continued to have until just last month. 3 movies out at a time, unlimitted in store exchanges, and 1 (later 2) coupons for free in store movie/game rentals. I believe I paid 16.99 a month for the service.
I finally dropped it last month and went to netflix for 1 simple reason. Free online streaming. Blockbuster charges you per movie to stream online. Although netflix's selection for online streaming is limited, its better than being charged on top of what you are already paying. Its stuff like this that proves that blockbuster will never adjust to changing times. They are doomed to meet the same fate as all of those mom and pop video stores that they muscled out of business.
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