Blockbuster to close 500 stores in 2010

(NBC) – Blockbuster might soon live up to their name. A Charlotte, NC, store is only one of at least 500 stores closing this year.

The nation's top video rental chain announced Wednesday voluntary bankruptcy protection could be in the future.  A loss of nearly $435 million in the fourth quarter worsened an already poor financial picture.

"They have close to a billion dollars in debt. They need to get rid of that and that's what's really stifling their ability to go forward," said Erik Gruenwedel of Home Media Magazine.

But it's a corporate makeover that CEO James Keyes talked about earlier this month on CNBC.

"The whole key is, we need fewer Blockbuster stores, and more express kiosks," said Keyes.

Redbox has used kiosks to offer dollar a night rentals which have proven to be very popular.  Blockbuster plans to have 10,000 of their own kiosks by the end of the year.

"We were a little late versus redbox in the development of vending," Keyes said.

Blockbuster's also playing catch up to their other competitor, Netflix, in the realm of DVD mail delivery.

"But in the future, we think it really comes down to the apples, the amazons, to compete on a digital front," said Keyes.

Blockbuster's alongside those companies and others in offering movies for download or streaming directly into the home.

"We certainly don't think we're late for the digital side. The digital side is now just emerging and it's a wide open landscape," Keyes said.

And the company's hoping brand recognition will help.

"The mainstream consumer, they understand what Blockbuster is, and what blockbuster stands for. Now it's just a matter of Blockbuster making the movie rental more convenient," said Gruenwedel.

Meeting that challenge will determine blockbuster's fate.

Blockbuster's CEO insists his company is not going the way of Circuit City, a company Blockbuster tried to buy before they went out of business last year.

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