San Francisco, After Blockbuster CEO John Antioco said that the video-rental business is “in the tank,” Monday brought a 5% drop in the Dallas-based video-rental giant’s shares, reaching a 52-week low of $4.30. Antioco’s comments appeared in The Wall Street Journal. He also said that the Hollywood studios have a “legitimate reason to be concerned about the entire video business.”
In addition to Blockbuster, other rental companies also experienced a stock dive, including chief rival Movie Gallery and on-line-DVD trailblazer Netflix, a relative newcomer to the rental business.
Even though Blockbuster’s 40% market share is tops among U.S. video rentals, the company has increased spending considerably in order to compete with rising star Netflix and discount retailers such as Wal-Mart Stores. The company’s recent elimination of late fees stands as just one example of the evolving rental environment. Blockbuster estimates that the eradication of late fees cut its revenue by about $140 million in the quarter.