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Dish to close rest of its Blockbuster stores in U.S.

By Michael Liedtke
AP Technology Writer

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SAN FRANCISCO: The final curtain is falling on the remaining Blockbuster video-rental stores that Dish Network Corp. runs in the U.S.

About 300 Blockbuster locations scattered around the country will be closed by early January. But 50 franchised stores will remain open in the U.S.

As part of Dish Network’s retreat, Blockbuster’s DVD-by-mail service is also shutting down next month.

About 2,800 people who work in Blockbuster’s stores and DVD distribution centers will lose their jobs, according to Dish Network.

The cost-cutting measures culminate a Blockbuster downfall that began a decade ago with the rise of Netflix’s DVD-by-mail service, followed by the introduction of a subscription service that streams video over high-speed Internet connections.

“This is not an easy decision, yet consumer demand is clearly moving to digital distribution of video entertainment,” Dish Network CEO Joseph Clayton said in a statement Wednesday.

The shift has been a boon for Netflix Inc., which now boasts 31 million subscribers to its Internet video service and another 7.1 million DVD-by-mail customers. The company’s success has minted Netflix with a market value of $20 billion.

But Blockbuster absorbed huge losses. It closed thousands of its stores before landing in bankruptcy court three years ago. Dish Network bought Blockbuster’s remnants for about $234 million in 2011 and then tried to mount a challenge to Netflix.

But the Englewood, Colo., satellite-TV provider couldn’t wring a profit from Blockbuster either, prompting even more store closures.

The chain’s near extinction serves as another stark reminder of how quickly technology can reshape industries. Just a decade ago, Blockbuster reigned as one of the country’s most ubiquitous retailers with 9,100 stores in the U.S.

Dish Network is trying to keep the Blockbuster brand alive through an Internet video-streaming service that rents movies and TV shows by title, for a set viewing time.

Blockbuster suffered an operating loss of $35 million on revenue of $1.1 billion last year and posted an operating loss of $4 million during the first half of this year, according to regulatory filings.


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