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Blockbuster shares plummet on bankruptcy fears

Rental chain denies reports of impending restructuring after rumors spark 75 percent drop in stock price.

Blockbuster looks less like its namesake and more like a big-budget flop these days as the movie and game rental chain is trying to manage $328 million in debt as it attempts to stave off encroaching competitors like Netflix and Gamefly. This week got off to a particularly trying start for the chain. Reports surfaced Tuesday that it had hired a law firm to assist with a possible bankruptcy filing.

Reports say Blockbuster is in danger of going bust.

Reports say Blockbuster is in danger of going bust.

As Reuters reports, Blockbuster shares lost more than 75 percent of their value Tuesday before trading was suspended. The rental chain responded to the plummeting share price by confirming that it had hired the firm to help raise capital and refinance debt, not for bankruptcy proceedings. Despite that, Reuters cited "a source familiar with the matter" as saying the company is exploring restructuring options that include a potential bankruptcy.

Blockbuster is set to update investors on its efforts to refinance March 19, during its quarterly earnings call. Shares in the company closed Monday at $0.65 and were dragged down to a Tuesday close of just $0.12. The rental chain rebounded somewhat today, closing at $0.17 a share.

131 Comments

  • gokuxdbz2

    Posted Mar 9, 2009 9:37 pm GMT

    Redbox effect...

  • lamprey263

    Posted Mar 9, 2009 9:05 pm GMT

    My roommate who works for BB has been hounding the management for a while now about carrying more games to sell, his store is right near a big university campus behind all the dorms and frats and apartments where students live, and I spent 6 years in college there to know that tons of those kids do nothing but play games. When a big game comes out they only get like 2 copies in, how are they supposed to make any money off that if they barely have anything to sell? Also from what he's told me, they only carry what people pre-order.

    Plus, they also need to give the local students 10% discounts on game sales, all the stores around the university do it, I believe even including the local radio shack that ended up selling games, and even the university bookstore sells video games at 10% discount for students, but BB doesn't, they're not even close to the competition in this regards, and they don't do the thing that Hollywood does where they give out free rentals as incentives to buy games there.

    Nobody in lower management at blockbuster has the freedom to be flexible with their location. It all depends on upper management and those upper management people feel they can't do anything unless asked for by even higher upper management. Nobody in the corporate hierarchy is taking any initiative to save the company and that's what is hurting them the most.

  • msudude211

    Posted Mar 8, 2009 5:48 pm GMT

    Many of the Blockbusters in my area have closed.

  • f4t4lfury

    Posted Mar 8, 2009 2:25 pm GMT

    $0.12 - wow O_O

  • ttheodoris

    Posted Mar 8, 2009 3:17 am GMT

    just like to say i work for bb and its about time. serves them right for treating there staff like cr*p. id like to see them burn.

  • simonsworld

    Posted Mar 7, 2009 4:57 pm GMT

    dynomitemasta is right with most what he said, about the whole bluray affair, but it will suck on a personal level for me, i have good memories of the place in my town, i cross my fingers they stay afloat

  • Cabal23

    Posted Mar 6, 2009 9:23 am GMT

    Their game rental section stinks. They never get replacements for games that people buy or scratch. Good luck finding a new AAA game. They have umpteen million copies of My dog Marley, and five copies of Fallout. When I asked why she said, no one has even asked about that game. Hunh??? The only thing BB is good for is used movies. $20 for three movies is not a bad deal. Not to mention all our Gamecrazy's in Atlanta are way out in the booneys some 20 miles away?. Not a single Gamecrazy in metro Atlanta. One of the biggest cities in the US. I wonder why they are failing.

  • lordrave

    Posted Mar 5, 2009 5:57 pm GMT

    Hurm,
    So, basically BB goes down because it was depending way to high on BD-ray?

  • yman173

    Posted Mar 5, 2009 3:36 pm GMT

    I havent rented a movie in years. With digital cable, HBO, Showtime, & Encore, you get a ton of movies. And if you want a new release really bad, you just go to On Demand without leaving the house. Not to mention Netflix if you really want to rent.

    As for games, Blockbuster's game rental department always felt like an afterthought. They never have the newest stuff in stock and a lot of times youre limited to only a 3-day rental. Hollywood Video & Gamecrazy are better at that market.

  • halomonkey1_3_5

    Posted Mar 5, 2009 11:48 am GMT

    i shop at blockbuster almost everyday(or someone in my famiy does) so if they went under it would be terrible for us! plus there the only movie/game rental place within 50 miles...so i would have to go through netflix and gamefly to rent movies and games...and i HATE gamefly...so it would be terrible for me if blockbuster went under...

  • jpsaply

    Posted Mar 5, 2009 11:24 am GMT

    kgthdc wrote:
    "30 points and $39.99 for unlimited points. The $40 is obviously the best deal because you get unlimited rentals, with 3 out at any given time. Movies have no due dates and no late fees "

    Maybe thats a good deal for people who run to the rental store, but Netflix has $17.99 rental fee per month for 3 movies out at any given time and is also unlimited day rental. Since it only takes 2 days to get the movies from the time you mailed the last ones back (mail back Monday get more Wednesday), you can literially have a movie come to you in the mail almost every day with the 3 movie order. Watch one movie tonight, send back the next day and repeat with second movie. Then by the third day you will have another recieved in your mailbox before you even watch the third. As long as you followed that formula you can have one in your mailbox everyday, but Sunday. Thats if you have the time to watch one everyday.

    Someone mentioned below about being on a wait list for new releases, I have never ran into that yet. For popular old releases I have seen that on.

    Anyway, it seems Blockbuster, Movie Gallery and those alike need to come up with a better system if they want to succeed. $40 is still way to much for a monthly fee.

  • Tr5978

    Posted Mar 5, 2009 10:46 am GMT

    I stopped using Blockbuster when they started becoming lax about stocking latest releases in a timely manner. Not only that, they'd only have about 5 or so copies of a newly released game, and they'd always be out of stock. Always.

  • Rottenwood

    Posted Mar 5, 2009 10:29 am GMT

    Not surprising; I don't know anyone who shops at Blockbuster anymore. It was a good place to get used games now and then, though, especially fringe titles.

    Wonder if this might be a time to snap up stock. Costs next-to-nothing and you never know if they might rebound, even mildly.

  • kgthdc

    Posted Mar 5, 2009 10:27 am GMT

    Yep, its a combination of the MVP program(which I had been interested in learning about for a while since we have gotten a bunch of Hollywood Video movies for sale at my store), Netflix, the old good-valued discount rental cards and Blockbuster's program. All Access or whatever it was called. In any case, if you're a strong renter, there really is no reason not to get it. It's a great value.

  • hacinthesac

    Posted Mar 5, 2009 10:18 am GMT

    That's cool. Mark's Video is the guy who founded hollywood video. he just sold his big company to movie gallery at a premium price and now has Mark's video/gametag.

  • sevvo73lasvegas

    Posted Mar 5, 2009 10:08 am GMT

    That's why I like Mark's Video/Gametag. No crazy up-sells, solid deals are available all the time, and the game clerks are SMEs. I don't feel rushed either, and have plenty of time to "check stuff out" before I make up my mind.

  • hacinthesac

    Posted Mar 5, 2009 10:05 am GMT

    Yeah, Hollywood video never had the discount card but have MVP which had unlimited rentals on it already like the 40 dollar plan, but at thirty. however now you get the discount benefits plus the game rentals. However this works out better for the customers that pay cash. 1$ a point, and games go for about 8.70 and cost 5 points so the customer will save a few dollars every rental which is great. I'm just curious if it'll be credit card required renewing program like our MVP was. that does alienate some people, but we'll find out saturday.

  • kgthdc

    Posted Mar 5, 2009 9:46 am GMT

    hac, I like it. It's easily better than the DRC offers that have been around lately. it basically brings Netflix to the stores. No shipping required and no waiting for months on a single movie just because its popular.

  • hyee

    Posted Mar 5, 2009 9:43 am GMT

    I rent with Blockbuster/Blockbuster Online for proximity and for the in-store option, but would switch back to Netflix if needed. But for all the Netflix subscribers out there, this news should not be seen as good news. It's basic economics, what happens when there is no competition, Netflix will be able to dictate policy without fear of backlash because they'll be the only option.

  • adam04901

    Posted Mar 5, 2009 9:42 am GMT

    dynomitemasta*

    you need to rethink your report. completely false!

    Blockbuster has many competitors especially netflicks that can make any promise for $12 a mo. then most online communities use torrents to steal media at no cost, a direct impact to the ecomony as smaller amount of money flows through the market.

    Bluray and HD dvd was just a format war. Bluray Media is half the price of one HD DVD, and three times less than a dual side dvd/ HD DVD. Furthermore, DVD/ HD DVD were NOT compatible with any DVD player or HD DVD player, only toshiba HD DVD and M$ xbox 360 HD drives.** Bluray drives were marketed at a higher value only because toshiba purchased out a chipset from SONY, then nearly lost their shirts in the process of supporting intel and M$ with HD DVD format war. Every HD player was taking a hit for a lost and Toshiba made too many HD DVD players. The Price point continued to drop below $50 included with 5 to 10 free hd dvds. A Complete failure.

    BLOCKBUSTER was on the right side of the fense using bluray. either way the user would had spent the same amount for the rental. secondly most users still ask for standard dvd.

  • Agent-CSim-47

    Posted Mar 5, 2009 9:41 am GMT

    NOOOOOOOOOOO!!! Blockbusters can't close down I have rented games from their for around 10 years now. Please find away out of going bankrupt.

  • hacinthesac

    Posted Mar 5, 2009 9:40 am GMT

    i can confirm what kgthdc said. store meeting march 7th. New plan starts on monday march 9th, plus you get 10% discount on concessions, used games, and 50% off on used dvds when you do the program as well. its an interesting new approach for hollywood video.

  • dkjjabs

    Posted Mar 5, 2009 9:31 am GMT

    @dynomitemasta

    HDdvd lost because of sony own half the film industry and the other half had no choiceand pixar said thay would never go back, so not picking pushed to like all of us

  • dynomitemasta

    Posted Mar 5, 2009 9:21 am GMT

    If you have been following the stock at all with Blockbuster they have made a couple CRUCIAL mistakes as of late... The first and biggest was exclusively picking bluray over HDDVD and getting in bed with Sony, both Blockbuster and Sony figured it was a win, win, ... but I have been saying since the beginning that this would be the downfall of the video giant..

    At the time they picked bluray over it's competitor, there were more stand alone HDDVD players on the market and the price of a player was 1/4 of the bluray... and they overlooked what was the key in my opinion to a SMOOTH TRANSITION into the world of HD video.... "The Combo Disk"... for less money than a bluray disk, you were allowing people to continue to "BUY" HDDVD's even if they didn't have a player.. DVD on one side, HDDVD on the other... so there wasn't this immediate push for anyone to get a new console.... SMART.... but greed and a secret alliance with SOny derailed the logical and smart move and they started carrying bluray exclusively along with a strong push for everything Sony.
    So, in the end they made the wrong choice out of greed, and underestimated the intelligence level of the average consumer... If only... if only they would of made the choice from the consumers standpoint instead of assuming they could make the choice for us..
    I for one preferred the combo disk, and at the time HDDVD was the superior technology aside from the size of storage which they addressed literally 2 weeks after their decision, make the storage amount virtually equal.
    I will hate to see them go, ... but I have no sympathy for them.

  • halosniper52

    Posted Mar 5, 2009 9:19 am GMT

    lol yes u do ur on the internet that's wht ppl do. I will ask tho.

  • Amnesiac23 Site moderator

    Posted Mar 5, 2009 9:18 am GMT

    I love Blockbuster for soom reason. Maybe the nastolgia factor has something to do with it, but I don't want to see it close down. Although I do think they are going to have to change some things.

  • kgthdc

    Posted Mar 5, 2009 9:17 am GMT

    Of course you didn't because we're not advertising it until Monday. I don't know why you don't believe me, but whatever. We're having a store meeting on Saturday to discuss all the points of it, but what I've just said are in the brochures they've sent to our stores. Go to your local store and ask on Monday and I guarantee you'll get the same details I just gave you. I have no reason to make this up.

  • halosniper52

    Posted Mar 5, 2009 9:11 am GMT

    "kgthdc"

    Funny I just went to a hollywoodvideo last night to rent a game and did not hear or see any sign that said any of this. Nice try guy That would be vary cool tho. I will believe when I see it and I'm going bak this Monday to return the game so guess I will see... well nothing new lol.

  • mcjakeqcool

    Posted Mar 5, 2009 9:10 am GMT

    How tragic, being that Blockbuster is a great rental spot, however, I must admit, I've been shopping for me games a hell of a lot more at good 'ol Tescos then Blockbuster, my motto is, when Blockbuster goes bust, every little helps! But anyway, If anyone is intrested, please check out pics of my console collection on my user profile above and feel free to coment.

  • jawshoeuh

    Posted Mar 5, 2009 9:06 am GMT

    used to goto blockbuster a lot, but happily switched to netflix. last time we went we didn't have our own account (we had been using my wife's Mom's account) and wanted to start just a regular account and they were telling us we HAD to sign up for the monthly fee Total Access and it was like, dude, no I already pay a monthly fee for netflix I just want be able to come up here and rent something on the fly when I feel like it. they told me all new accounts had to be total access accounts and I was like cool, nevermind I'll just stick with your competitors. so I left and haven't been back.

  • Mr_Versipellis

    Posted Mar 5, 2009 9:02 am GMT

    I'm not at all surprised... Online rental is SO much cheaper.

  • kgthdc

    Posted Mar 5, 2009 9:01 am GMT

    No joke. It's called Powerplay. We're getting rid of discount rental cards. it's starting up next Monday. Go to your local movie Gallery/Hollywood Video and they'll confirm what I've said. It's a monthly deal. Basic deals are $7.99 for 8 "points"(points correllate to dollars) $14.99 for 15 points, $29.99 for 30 points and $39.99 for unlimited points. The $40 is obviously the best deal because you get unlimited rentals, with 3 out at any given time. Movies have no due dates and no late fees and games are due back in 5 days, but can be rechecked out for just 5 more points.

  • Karimcheese

    Posted Mar 5, 2009 8:59 am GMT

    I saw this coming from miles away!

  • halosniper52

    Posted Mar 5, 2009 8:58 am GMT

    "kgthdc"

    lol ur so full of sh*t....I wish that would happen tho.

  • jpsaply

    Posted Mar 5, 2009 8:53 am GMT

    I hate to say it, but with the price to rent both games and movies its no wonder Netflix and Gamefly are taking over.

  • kgthdc

    Posted Mar 5, 2009 8:53 am GMT

    I work at Movie Gallery/Hollywood Video, and we're about to roll out a plan that completely decimates anything Blockbuster has to offer. Your $5 game rentals for 5 days are back. New release movies down to $3, Blu-rays at 4 with NO DUE DATES or LATE FEES.

  • jcasanova

    Posted Mar 5, 2009 8:51 am GMT

    In Mexico, blockbuster is the rental leader!! They have barely no competition here and it has great offers when purchasing movies and sometimes these apply to games too. Hope this doesn't affect Mexico's Blockbuster, it's the place where blurays are cheaper and it's the only place I know that offers preowned games.

  • creepy_mike

    Posted Mar 5, 2009 8:33 am GMT

    Yeah, I work at a public library that just happens to loan out movies AND games for free...on the same street as our poor local blockbuster. Considering our daily foot traffic is several hundred times larger, they'll probably be one of the first branches to go.

    Hopefully, though, this can be equally attributed to the entire industry of brick-and-mortar video rental being virtually obsolete, then maybe more successful and relevant companies still stand a chance?

  • Lionheart8472

    Posted Mar 5, 2009 8:31 am GMT

    For Canadians, this sorta sucks. Yes Blockbuster DOES charge REDICULOUS prices for renting anything there, however I don't just keep the game for a week. You basically have 3 weeks from the time you rented it to give it back. After that point you get charged the full price of the rental.

    I usually keep games for 2 1/2 weeks and end up paying the $1.99 restocking fee only.

    So it comes out to about 14 dollars per rental which is still high but it's the best we got. It's a decent amount of time to have a game too. Canada also has a Gamefly type of service, but really I don't like the idea of paying like $30 dollars a month or whatever to rent games. I rent games once in a blue and I HATE having reoccuring bills.

    Oh and in my blockbuster only 2 or 3 shelves have Blu-Ray on it. That's out of like 50 shelves lol. I'd hardly call that "Heavily Investing".

  • King_Jeremy_77

    Posted Mar 5, 2009 8:31 am GMT

    This news sucks.

  • Katmando4Life

    Posted Mar 5, 2009 8:29 am GMT

    I'm a manager at the local Blockbuster, and we got an e-mail from the CEO stating this exact same thing. I knew the stocks were in bad shape, but $.17 is terrible.

    I'm sorry that everyone seems to have had bad experiences at Blockbuster. At my store, the management has always taken customer service very seriously.

  • Inconnux

    Posted Mar 5, 2009 8:23 am GMT

    This is what they get for heavily investing in Blu-ray. The vast majority of people do not own a player and (at least in my local store) the blu-ray section is far too large in comparison to the % of people who own the machines. Stick to what sells

  • halosniper52

    Posted Mar 5, 2009 8:22 am GMT

    Good I'm glad, that's what u get for charging ppl like 10$ to rent a game for 5 days. That's how much they charge where I live that is. I miss the days when games where 5$ for 5 days.

  • zorbmeister

    Posted Mar 5, 2009 8:21 am GMT

    This is awesome! Cheap games thanks to the blockbusters closing down sale!

  • svaubel

    Posted Mar 5, 2009 8:09 am GMT

    What Shawn7324. I never liked Blockbuster. Overpriced and employees werent very good.

  • ckat609

    Posted Mar 5, 2009 8:04 am GMT

    This sucks... I'm all for VOD but still... it was nice to go out and rent a movie... driving back to return it was the downside.

  • shawn7324

    Posted Mar 5, 2009 7:59 am GMT

    What do they expect with their terribly high prices & pathetic customer support???

  • jojo1983

    Posted Mar 5, 2009 7:54 am GMT

    Now if only Gamestop would go bankrupt

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