Netflix and LoveFilm put paid to Blockbuster's DVD business

Jan 17, 2013

But some Blockbuster stores remain profitable and Deloitte hopes to find purchasers

BLOCKBUSTER UK went into administration yesterday putting 4,000 staff jobs at 528 shops in jeopardy. As The Times reports, the DVD rental chain is the latest high street victim of a business model broken by the internet following the collapse of the Jessops camera shops and, only this week, the HMV music chain. Deloitte has been appointed to try and find buyers for the business.

The UK arm of the company was brought low by a £23 million debt to US parent company Dish Networks but it is claimed that some Blockbuster stores are actually trading profitably and Deloitte hopes to save a core of the best performing outlets.

The chain opened its first British store in 1989 and quickly came to dominate video rentals, reaching a peak in the year 2000 before movie rentals came under attack from online companies like Netflix and LoveFilm which offered a mail service.

More recently video streaming by Virgin media and digital downloads from Apple have bitten hard. Crucially, Netflix and LoveFilm now allow customers to download films.

"The 'rental of physical media' model is as broken as broken can get," said Robin Knight, restructuring specialist Zolfo Cooper. "People rent media for quick and instant consumption. The best way to do that is through downloads from Netflix or LoveFilm.”

Retail experts say further victims of the current trend are inevitable. Accountants Begbies Traynor estimate that 140 companies are at risk of collapse this year.

Sign up for our daily newsletter