Variety has an excellent analysis of the troubles that Blockbuster is facing in the story "Blockbusted!" In the article a former Blockbuster executive is quoted as saying:
“We had the option to buy Netflix for$50 million and we didn't do it. They were losing money. They came around a few times," he recalls. Instead, in 2000, Blockbuster inked a 20-year exclusive video-on-demand pact with Enron as the energy conglom launched into telecom. Blockbuster canned the pact after nine months. Netflix is now worth $1.4 billion. Blockbuster’s market cap is about $850 million.
The story also says that Blockbuster is selectively closing stores, a move that will help the turnaround. A consultant suggests that Chapter 11 will enable Blockbuster to get out of leases and help it reduce the cost of running 9,100 stores, something that would help the troubled company reinvent itself.
Thanks to Joe for sending this in.