Blockbuster may be on the verge of financial collapse, according to industry analysts, reported by Cue Entertainment, as the company’s latest quarterly results show a net loss of $35 million during the summer. The rentailer is now planning job and resource cuts in a defensive effort to protect its core rental business.

Analysts believe that online video services are proving too much competition for the chain. Blockbuster offers hard copy rentals via an online service, but has been slow to adapt to video downloads.

The company has also hinted it may exit more international markets. CEO James Keyes told analysts that Blockbuster planned to “selectively license” some of its international markets, allowing the sale of physical assets.

“Longer term, a strong license presence in each country can significantly establish the Blockbuster brand, facilitate growth and yet set the stage for a future digital offering in each of those international markets,” he said.

In October, Blockbuster sold its Australian operations to the region’s biggest rental operator Video Ezy and rumours persist about the future ownership of its franchise business in New Zealand.

The rental group has a network of 8,360 stores worldwide, down from the 9,042 this time last year.
Keyes said that the company was the process of completing a country-by-country assessment of the strengths and weaknesses of each local operation.

He maintains the actions the company has taken over the past three months have improved Blockbuster’s future prospects. “Going forward, we are focused on protecting our core rental business, developing new retail opportunities, and becoming the preferred provider of digital entertainment,” he said. “To this end, we have launched a series of initiatives centred around product availability and increased emphasis on our retail business.”

Story filed 05.11.07