Ailing Blockbuster to close 300 stores

The embattled video-rental chain will lay off 3,000 employees as well, raising more questions about its future. It will have just 500 US locations left.

By Aimee Picchi Jan 22, 2013 12:51PM

A customer returns a video game to a Blockbuster store in Santa Clara, Calif. on Aug. 7, 2008 (Paul Sakuma/AP Photo)The video-rental chain Blockbuster is laying off about 3,000 workers as owner Dish Networks (DISH) shutters about  300 stores.


The closings raise questions about the future of Blockbuster, which the Denver Post notes has been pushed "to the brink of death." After the closings, Blockbuster will operate just 500 locations in the U.S.


The incredible shrinking Blockbuster business may not surprise people who have visited a store recently. When the local Blockbuster store in my city closed a few years ago, it wasn't exactly a shock: The store was never busy, and it seemed to rely as much on sales of candy as actual video rentals. 


That's a far cry from less than a decade ago, when Viacom (VIA) split off the video-rental chain in 2004. At the time, Blockbuster operated some 8,900 stores worldwide, although cracks were already showing in its operations. Viacom set the split after failing to find a buyer as Netflix (NFLX) ate into Blockbuster's customer base. 


The latest round of closures comes after Dish shut down about 500 Blockbuster stores last year.


With the rash of store closings, it's fair to ask whether Dish executives regret buying the video-rental chain out of bankruptcy in 2011 for $320 million.


If they do, they're not saying so publicly. Dish "continues to see value in the Blockbuster brand," a spokesman for the satellite-television operator told the Denver Post. The 300 stores that will be closed are those that are unprofitable or those near the end of their leases. The locations of the closures haven't been announced, Dish told the newspaper.


One idea that Dish continues to consider is turning Blockbuster stores into smartphone and wireless service outlets. "We're still evaluating that," chief executive Joe Clayton said at the Consumer Electronics Show earlier this month, according to the Post. "It's still in exploratory phase."


Soon after Dish bought the chain, it touted the company's "iconic brand" and a new suite of services, including Web streaming. But Dish founder Charlie Ergen gave up on the plan last year, amid regulatory issues. 


Ergen shed some insight into Dish's decision to close Blockbuster stores, hinting to Bloomberg News about the poor economics of the video-rental business. "When your lease runs out on the stores, you can’t re-up because you can’t make enough money from just selling DVDs,” he said.


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11Comments
Jan 22, 2013 4:58PM
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I hope they do not close the one by my house. People knock blockbuster but I do not think those people have been in the store in awhile. The one by me has $2-$3 one day rentals and 2 for $3 on Sunday (normally $3 each). It's a little more than redbox but the selection is not even close. I like and use Redbox too but I have 5 redboxes by near house and all 5 are constantly out of the newest movies.
Jan 22, 2013 4:47PM
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Dead outdated business. Guess the 3,000 shouldn't have any problem getting assistance now that the Obamas are back in the White House. Isn't it great to live in a country where everyone has such time on their hands and can sit back and admire how great the first family looks living in their opulence? Those who are working 2 and 3 jobs to live paycheck to paycheck I'm sure are living in envy knowing everyone shares in the sacrifice, Yeah Right!
Jan 22, 2013 6:04PM
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Blockbuster Video???? lol I know what they are, I just didn't know they still existed. 
Jan 22, 2013 8:01PM
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OldChump...Not really sure what your post is about, except maybe a rant...?

 

It's too bad,these are mostly younger people in life, starting out..MAYBE the ones that pay our Social Security, if you are that old ??...3000 more people without a job, don't really understand anyone wanting that??

Now they will only have 500 stores in operation....After having 8900 in the heyday...Too bad.

Wonder how many jobs have been lost in all that?

Unfortunately BB is like so many, maybe resting on their past laurels and adverse to change or changing times?

I'm sure some will miss their locations for usage, and the employees gone, for sure....

***Edited*** for...BTW..GET OFF MY LAWN !!!

Jan 22, 2013 6:37PM
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I've sold advertising for many years.  Businesses based on the latest technology have a very short lifespan.  Technology changes so rapidly that by the time you develop the business/product, test it, workout the bugs, etc. the technology is outdated.  

Jan 22, 2013 7:10PM
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They closed the one down by me last year.  It is always sad to see people lose their jobs, but that is free enterprise.  Adapt or go out of business.
Jan 22, 2013 7:32PM
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I cancelled my Blockbuster mail account when the closed the local store.  It was gret to watch a movie Friday and go to the store Saturday and get another for free.  But Net-Flix is a piece of crap and not a viable alternative.  I have a blueray player and a Roku, The Roku is getting all the use now  and that Amazon is the best sourse.  As a premium member I get free streaming of just about everything but  current TV shows. 
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