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By Seamus Swords
Staff Writer
Wednesday, 24 March 2010
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THE American arm of DVD rental company Blockbuster has announced that it may have to go bankrupt as it struggles to keep up with the changing habits of movie fans.
Across the pond, meanwhile, Blockbuster UK is not only unaffected by the financial difficulties of its American cousin but actually seems to be doing better than ever, having secured a number of exclusive rental deals.
Blockbuster's Ever-increasing Debts
The DVD rental giant is currently operating under $975 million (£635) of debt, largely inherited after splitting with media conglomerate Viacom. In 2009, Blockbuster announced a loss of $569 million largely due to massive interest repayments.
To make matters worse the company are currently negotiating the financial terms under which Hollywood studios provide DVDs to its store, this could see the terms changing possibly meaning Blockbuster will have to make upfront commitments to secure DVDs for rental.
On top of mounting debts, Blockbuster have lost out to the increasingly popular DVD postal service Netflix and Redbox, whose bright red $1 rental vending machines have become a familiar sight in American supermarkets.
Blockbuster Chief Financial Officer Tom Casey described talk of bankruptcy as 'precautionary language' and claimed that customers shouldn't be too alarmed, although that hasn't stopped American commentators sounding Blockbuster's death knell.
Meanwhile in the UK...
The UK arm of Blockbuster has been keen to distance itself the US from are keen to reiterate that it will not be adversely affected by its US cousin's financial troubles.
Martin Higgins managing director for Blockbuster was quick to point out that "...Blockbuster UK is a separate legal entity, which is well-run and in a healthy financial condition with solid equity and no debt beyond normal accounts payable."
Furthermore, Blockbuster over here has been able to boast an increase in rentals in the past year leading to an 18% increase in profits which the company puts down to the increase in demand for Blu-ray discs (they get a good review from us on this in our guide to blu-ray rental).
Blockbuster has also managed to secure a number of upcoming exclusive deals which will allow their customers to rent DVDs before they're available anywhere else.
Upcoming exclusives include Clooney-vehicle The Men Who Stare at Goats, the newest Scorsese film Shutter Island and comedy Youth in Revolt.
Could Movie Streaming Save Blockbuster?
In amongst the bad news for Blockbuster in the US came some good: the company announced the launch of a new movie streaming service.
The Blockbuster streaming service will be available on Samsungs latest Plasma HDTVs and owners of Samsung Blu-ray players and Blu-ray home theatre systems will also have access to the service.
Movie streaming is reckoned by many movie and technology buffs to be the future of rental and many saw Blockbuster's failure to keep up with the technology in the past as symptomatic of its decline.
Movie streaming is also emerging as a competitive service in the UK.
It's already available from Lovefilm through specialised Internet-ready TVs.
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