It's been known to be happening for months, but Blockbuster made it official today and filed for Chapter 11 bankruptcy. The plan calls for more than $1 billion in debt to be written off and brought down to a much more manageable $100 million.
Blockbuster's new line of creditors include its movie studio suppliers, including Warner Brothers, Universal, Fox, Sony and Disney.
The movie studios have always had a cozy relationship with Blockbuster, dating back to the 1990's when Blockbuster was the premiere movie rental location. Even as the company's fortunes have waned, the studios have remained close. Hollywood believes it is in their interest to keep Blockbuster around, where the average rental costs more than four times those from competitors like Redbox.
But how long can Blockbuster hang around? The movie studios have seen what happened when the music industry was caught unprepared for the digital revolution, but Disney seems one of the few willing to put its content where it's mouth is.