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The Wall Street Journal is reporting today that Blockbuster will declare bankruptcy later this week. The company is drowning in $900 million in debt. For the first half of the year Blockbuster reported a $136 million net loss, compared to a $15 million loss a year ago. Rental revenues were down 17% to $1.1 billion and overall revenues (including sales) were down 16% to $1.7 billion.

As smaller video stores collapsed over the years, Blockbuster had remained a stalwart presence in many mini malls. But with the growth of things like Netflix, Redbox and video on demand, the 5,800-store chain now seems like a dinosaur.

But with such a strong brand name, why couldn’t Blockbuster keep up? I got a glimpse of some of the problems last week when I went to rent Oliver Stone’s original Wall Street in preparation for an interview with the director.

My local store said they had two copies but both were out at the moment. In fact one seemed to be lost and the other had been out for over a week. The clerk said that it looked like the film had been rented by someone using Blockbuster’s new Total Access program which allows you to rent movies by mail (a la Netflix) and return them in stores in exchange for free rentals with no due dates or late fees. (I had wasted many hours with my kids this summer listening to the Blockbuster folks pitch this plan to other people in line.) So the company’s new initiative was bleeding the store of inventory.

I asked if I could put my name down so they could call me in case it came back because I had a few days before the interview. The clerk said they didn’t do that.

I went home and easily found the movie available for instant viewing on Netflix and watched it on my computer. I would have much preferred to watch the disc on my big screen television but beggars can’t be choosers.

The store did run an excellent promotion this summer where you could take out kids movies for $1 per film and keep each for five days. But almost inevitably the discs were scratched and unwatchable because the store didn’t care much about its inventory and I finally even gave up on that.

Between the lost and scratched films, it seems like customer service in the stores (the one thing Blockbuster could have still bragged about as it’s the only place where you can rent movies from an actual human being) has completely fallen by the wayside.

As soon as the new AppleTV hits stores, I’m tearing up my Blockbuster card in favor of Netflix instant streaming (which I’ll be able to play on my TV) and iTunes rentals. Whatever the headaches that arise from those technologies, they’re sure to be less stressful than going to Blockbuster.

According to the Journal, Blockbuster is not going to disappear completely. A deal with senior creditors should wipe out the company’s debt and allow it to restructure which will mean fewer stores and, potentially, a larger online presence. It could help the company make a comeback  but there’s a good chance it could all be too little too late."




Can't say I didn't see this coming.

Thoughts?