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Blockbuster may have been busted by Netflix

For many years Blockbuster video enjoyed great success in the movie rental business. Blockbuster is one of the largest movie rental chains in the country, but the company has found that its continued existence is far from guaranteed.

Blockbuster has announced that there is "substantial doubt" about its ability to continue as a going concern. A going concern is a qualification that refers to an auditor's assessment of a company's ability to continue operations reports MSNBC.

Blockbuster is struggling with profitability and viability in the face of the rising popularity of mail-order rental services like Netflix the company stated in a SEC disclosure. Blockbuster had previously disclosed that an auditor was likely to raise doubts about its long-term viability.

Blockbuster stated last week that its revolving and term loan agreement had been amended giving the company a $250 million revolving loan for financing maturing on September 30, 2010. The company thinks it will be able to close the financing around May 11, but states that the closing of the loan is not assured at this point.

Blockbuster says that even if the loan is funded it, "may not have sufficient liquidity to finance the ongoing obligations of our business, which raises substantial doubt about our ability to continue as a going concern."

Blockbuster shares fell 3 cents to 85 cents in trading after hours after closing at 88 cents reports MSNBC. In July of 2008 Blockbuster was considering the purchase of now defunct Circuit City.  

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Don't forget Red Box
By bighairycamel on 4/7/2009 1:22:05 PM , Rating: 2
I personally use Netflix, but many of my neighbors/friends/co-workers use Red Box now instead of Blockbuster or Hollywood Video. Also, some of them use on-demand movie services through their cable or satellite company.

Both are more convenient than a B&M rental store.

RE: Don't forget Red Box
By Zshazz on 4/7/2009 1:59:14 PM , Rating: 2
That's what I was thinking too. Red Box is great ... I hardly ever go to Blockbuster anymore. You just can't compete with $1/day movie rentals with the ability to reserve the movie online. It's utterly awesome, even new movies are usually in stock!

RE: Don't forget Red Box
By syphon on 4/7/2009 2:09:14 PM , Rating: 2
I have never had an issue with Redbox. The fact that I can return it to any location and go online to find which one near me has the movie I want.

Blockbuster needs to get smart and take their already large inventory and ditch the stores and start up something like Redbox. With their brand name, they could definitely get stores to let them put a machine in. Honestly, paying 4-5 bucks for a movie at their store is worthless to me when I just pay $1 and go to a store right next to my house and get my new release. On top of that, I can return them to the store next to my work.

RE: Don't forget Red Box
By Zshazz on 4/7/2009 2:53:26 PM , Rating: 2
Yeah! Exactly. For Blockbuster, I had to plan my day around the exact Blockbuster I had to return my movies to. With Red box, I just go to the one that's most convenient to where I need to go that day. I love it. They're all over the place, too. I have 8 in my immediate area, so it doesn't matter what direction I want to go.

I wish there was a service like that for games... I've never been satisfied with the way game rentals have been done. Gamefly works alright, but I'd just like to have it in my hands, same day.

RE: Don't forget Red Box
By christojojo on 4/7/2009 4:46:38 PM , Rating: 3
To me The movies at redbox are more like $30 a month versus a Dollar a day. Yeah, I know that you can return them the same day but If I rent one that day I am not going out to return it most likely. Sometimes I rent a movie knowing that I have to wait a day or two to watch. Redbox doesn't guarantee the film I want wont be rented out. Personally, If I am looking online I might as well stream or have one sent to me at $8.99 per month. (If you average 3 movies a month with red tube and take 3 days to get, watch and return it you actually get your money's worth out of Netflix.) (Sorry for what sounds like a commercial)

I think that if Blockbuster had a combination system in place like netflix it would be still strong. I even suggested to them several times that they should have aren't from store return by mail/ any store system. Each time I was told that's not how they do things.

The true problem was/is Blockbuster has/is run by nay-sayers not innovators. They say no with spreadsheet reasons and now they pretty much lost the rental war.

RE: Don't forget Red Box
By JediJeb on 4/7/2009 6:25:18 PM , Rating: 2
Never heard of Red Box, and in my town the only places to rent movies are Block Buster, Wal Mart( I think they still rent movies, havent been in there for a year) or Circus Video ( small local video store with tanning beds in the back lol). Only other option here would be Netflix, because I'm not paying for Hughesnet just to download videos and there isn't another option for broadband at my house.

The mail order ones would be ok, but for the time you just on a wim want to rent a movie, it would be difficult here with out Block Buster, unless I want to drive 40 miles to another store.

RE: Don't forget Red Box
By kmmatney on 4/7/2009 7:56:25 PM , Rating: 2
Your doing the RedBox thing all wrong. First, you can reserve the movie online, so you can pretty much garauntee that the movie will be there. Second, if you can't watch it the day you rent, just rip it and watch it at your convenience. You have until 9:00 PM the next day to return, and you can return it to any location. MNost people will have locations near both home and work, so it's pretty flexible.

The nice thing about RedBox is that you can take a break from watching movies, without penalty (e.g. you can go 4 weeks without watching anything, and not feel like your wasting money).

All RedBox needs is:

- Bluray movies. Apparently they have these, but not near me.
- They need special return slots, so you can return movies without waiting for people taking forever selecting their movie. The Walmart near me has 2 redboxes, which is nice as you usually don't have to wait.

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