After suffering a difficult last few years, including ever-shrinking profit margins and the delisting of its stock from the New York Stock Exchange, the (former) video rental giant announced today that it's filing for Chapter 11 bankruptcy (though they're calling it a "pre-arranged recapitalization").
I think relatively few people are surprised, though I would have given them another year or two before expecting a bankruptcy announcement. Between Netflix's stranglehold on pre-planned video rental and redbox's domination of the impulse rental with their kiosk model, Blockbuster hasn't had anywhere to go for some time.
Speaking of nowhere to go: while Borders hasn't (as far as I know) given any indication that they'll be filing for bankruptcy anytime soon, I do see some similarities between the two companies. Both are apparently strapped for cash; both have been (or have been in danger of being) delisted by the NYSE (Borders' stock has hovered around the minimum average close of $1.00/share for most of 2010); both are competing against impossibly popular, efficient, and fast-growing electronic competitors (Netflix and Amazon, respectively); and both demonstrate, à mon avis, only a half-hearted and ill-informed attempt to enter the digital market (Blockbuster with their on-line rental queue feeding their mail service, Borders with their .com business and partnership with various third-party e-reader manufacturers).
Long story short: I'm not surprised by this turn of events for Blockbuster and while I don't think it necessarily prefigures a similar downturn for Borders, I think the stories are similar enough that both consumers and industry insiders should be paying attention. If Borders' management doesn't right the company quickly, it may be too late to avoid a "pre-arranged recapitalization." Here's hoping it's not too late already.