Blockbuster could close 960 stores
SAN FRANCISCO — Blockbuster Inc. may close as many as 960 stores by the end of next year, shedding more dead weight as the struggling video rental chain tries to reverse its losses and fend off rapidly growing rivals Netflix Inc. and Redbox.
The cuts would leave Blockbuster with about 20 percent fewer U.S. stores, according to documents filed Tuesday with the Securities and Exchange Commission.
The documents didn’t identify the locations of the endangered stores. Blockbuster hasn’t made any final decisions on the possible store closures, Chief Executive James Keyes said in an interview Tuesday.
Keyes described the closures as something that Blockbuster is considering as it sets up more DVD-rental kiosks in the stores of other merchants. It’s a concept that has been popularized by Redbox.
By the middle of next year, Blockbuster hopes to have 10,000 kiosks scattered around the country. It had just 500 kiosks at the end of August.
"We could have fewer physical stores and still have more rental points for our customers," Keyes said.
Blockbuster’s shift serves as another reminder of video stores’ waning appeal as consumers buy and rent movies through the mail, on the Internet and through cable connections and standalone kiosks.
The shift has threatened to turn once-mighty Blockbuster into a dinosaur. The Dallas-based company has been trying to evolve by embracing kiosks and expanding into rentals delivered through the mail and the Internet free credit report online.
But it hasn’t been enough to justify keeping so many stores open. About 18 percent of Blockbuster’s stores aren’t making money.
Blockbuster is thinking about closing between 810 and 960 of its U.S. stores before 2011, up from the 380 to 425 stores that normally would be closed during that time span, according to Tuesday’s filing.
As of mid-August, Blockbuster had closed 276 stores this year.
Besides closing stores, Blockbuster indicated that it will convert at least 250 stores into smaller outlets.
If Blockbuster hits the high end of the new target for store closures, it will represent 22 percent of its 4,356 stores in the United States.
Netflix’s DVD-by-mail service has hit Blockbuster particularly hard as more households have embraced the concept of picking out their rental choices online before the DVDs are delivered through the mail. In the last two years, Netflix lured even more customers by building up its library of movies available for instant viewing over high-speed Internet connections.
Netflix now has 10.6 million subscribers and, unlike Blockbuster, is becoming more profitable.