May 16, 2009
Surge in movie-going socks Blockbuster
Quarterly numbers released this week by massive DVD rental chain Blockbuster Inc. shows it is facing tough competition from a new source, analysts say.
Already faced with challenges from online services such as Netflix, the company is also being hit with a resurgence of movie watchers pouring into first-run cinemas to take in major new films instead of staying home to watch the small screen, contributing to a 20 percent drop in sales, The Chicago Tribune reported Saturday.
The main issue (for Blockbuster) is that same-store sales were worse than expected and there's a concern about how long it will take them to get back on track, Arvind Bhatia, an analyst at Stern, Agee & Leach, told the newspaper, adding he believes Blockbuster has a year of breathing room because it succeeded in temporarily renegotiating the terms of its $922.5 million of indebtedness.
Blockbuster CEO Jim Keyes told analysts in a conference call Thursday that with 3 million more people going to the movies each week so far this year compared to the same weeks in 2008, DVD rentals are being pummeled.