Home movie rental company Blockbuster has announced it is going into administration in the UK…
The accounting firm Deloitte announced today that it has been appointed as administrator. Blockbuster UK has 528 stores overall, with almost 4,200 jobs at risk.
“The core of the business is still profitable and we will continue to trade as normal in both retail and rental whilst we seek a buyer for all or parts of the business as a going concern,” said administrator Lee Manning.
Blockbuster is the second UK firm to go into administration this week, after music and movie retailer HMV called in administrators on Tuesday after more than 90 years in business.
Lavinia Carey, director general at the British Video Association, made something of an understatement when she described the situation as a “bad start to the year for video entertainment”.
“The BVA is saddened by the news that Blockbuster has followed HMV into administration today. Like HMV in sales, Blockbuster was the last significant specialist rental retailer.”
The BVA noted that Blockbuster’s stores accounted for 32 per cent of the rental volume in 2011, down from 35.6 per cent in 2010.
Carey pointed to a tough market challenged by digital video models, which are starting to fulfil consumer demand “amongst younger viewers with connected devices and those with smart TVs via internet services.”
Over the last 10 years rental chains in the UK generated over £500m in consumer spend and 86 per cent of that was on physical formats. In 2011 that consumer spend remained high at £464m for video rentals, but it had declined to 59 per cent physical and 41 per cent on digital video.
“Nevertheless, Blockbuster still has significant market to fulfil, with 8.8 million people saying they rented a disc in 2011, according to Kantar Worldpanel,” said Carey.
In comparison, music and video retailer HMV had an estimated 38 per cent share of physical music sales in the UK, through 249 stores.
“But this sad news could actually drive growth in digital music, which Ovum expects to hit £450m this year, as consumers consider digital music channels instead,” said Mark Little, principal analyst at Ovum.