Monday 22 December 2014

300 US Blockbuster stores to close

Published 07/11/2013 | 03:46

Blockbuster is closing 300 stores in the US
Blockbuster is closing 300 stores in the US

The final curtain is falling on about 300 US Blockbuster stores, leaving the once dominant video rental chain with just 50 franchised shops remaining open in the country.

The remaining stores that Dish Network runs in the U.S. will be closed by early January. As part of Dish Network's retreat, Blockbuster's DVD-by-mail service is also shutting down next month.

The cost-cutting measures culminate a Blockbuster downfall that began a decade ago with the rise of Netflix's DVD-by-mail service, followed by the introduction of a subscription service that streams video over high-speed internet connections.

The chain's near extinction serves as another stark reminder of how quickly technology can reshape industries. Just a decade ago, Blockbuster reigned as one of America's most ubiquitous retailers with 9,100 stores in the US.

Blockbuster also operates in other countries including the United Kingdom, Australia, Brazil and Mexico.

About 2,800 people who work in Blockbuster's stores and DVD distribution centres will lose their jobs.

"This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment," Dish Network chief executive Joseph Clayton said.

The shift has been a boon for Netflix, which now boasts 31 million subscribers to its internet video service and another 7.1 million DVD-by-mail customers. The company's success has minted Netflix with a market value of 20 billion dollars (£12.5bn).

But Blockbuster absorbed huge losses. It closed thousands of its stores before landing in bankruptcy court three years ago. Dish Network bought Blockbuster's remnants for about 234 million dollars (£146m) in 2011 and then tried to mount a challenge to Netflix.

But the Colorado satellite-TV provider could not wring a profit from Blockbuster either, prompting even more store closures.

Dish Network is trying to keep the Blockbuster brand alive through an Internet video-streaming service that rents movies and TV shows by title, for a set viewing time.

Blockbuster suffered an operating loss of 35 million dollars (£22m) on revenue of 1.1 billion (£687m) last year and posted an operating loss of four million dollars (£2.5m) during the first half of this year, according to regulatory filings.

AP

Press Association

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