Blockbuster operates 3,750 U.S. stores, and franchises 606 more. The cuts outlined in documents filed Tuesday would leave Blockbuster with about 20% fewer U.S. stores. The previously confidential [image-nocss] documents did not identify the locations of the endangered stores. Blockbuster has not made any final decisions on the possible store closures, former convenience store executive Jim Keyes, Blockbuster's CEO, told AP.
Keyes described the closures as something that the chain is considering as it sets up more DVD-rental kiosks in the stores of other merchants. By the middle of next year, Blockbuster hopes to have 10,000 kiosks scattered around the country, he said. It had 500 kiosks at the end of August.
"We could have fewer physical stores and still have more rental points for our customers," Keyes told the news agency.
"We've been described as a melting iceberg, but we're no longer melting," Keyes told The Dallas Morning News. "We have an opportunity to improve our availability to the customer. With 2,500 kiosks opening this year and a total of 10,000 by next year, we're not shrinking."
Remaining stores and new kiosks will form a hub-and-spoke system, Keyes added. The move will let Blockbuster improve locations in neighborhoods where consumers prefer stores. It has been testing stores in Dallas with a focus on either video games or consumer electronics. Others have convenience store-style soda fountains and snack counters.
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.
About 18% of Blockbuster's stores aren't making money, according to the documents cited by AP, filed with the Securities & Exchange Commission (SEC).
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 so far 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% of its 4,356 U.S. stores.
Netflix's DVD-by-mail service, launched a decade ago, has hit Blockbuster particularly hard as more households have embraced the concept. It now has 10.6 million subscribers and, unlike Blockbuster, is becoming more profitable. The company earned $55 million through the first half of this year while Blockbuster lost $15 million.
Redbox also has been hurting Blockbuster with its red kiosks that rent DVDs for just a $1 per night at supermarket, convenience store, fast-food and other locations. That low price has proven particularly compelling during the recession as more people pinched pennies.
Separately, Duluth, Ga.-based NCR Corp. has reached an agreement to operate its DVD rental kiosks in Publix Super Markets, the largest employee-owned U.S. grocery chain. NCR plans to complete the installation of its Blockbuster Express DVD-rental kiosks in most Florida Publix stores by November 1. NCR also has begun installations in select Publix stores in other major markets, including Atlanta; Birmingham, Ala.; Savannah, Ga.; Greenville, S.C.; and Charleston, S.C.
NCR also is converting The New Release and MovieCube-brand kiosks acquired with TNR Entertainment in April 2009 located in approximately 300 Publix stores to Blockbuster Express kiosks.
NCR is launching the new self-service DVD rental experience under the Blockbuster Express brand. The kiosks hold more than 800 DVDs.
Blockbuster and NCR entered into an agreement in August 2008 to deploy Blockbuster-branded DVD-rental kiosks.
(Click here for previous CSP Daily News coverage of Blockbuster. Andclick here for previous coverage of Redbox.)
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