Surge in movie-going socks Blockbuster

CHICAGO, May 16 (UPI) -- Quarterly numbers released this week by DVD rental chain Blockbuster Inc. shows it is facing tough competition from a new source -- theaters, analysts say.

Already faced with challenges from online services such as Netflix, the company is also being hit with a resurgence of movie watchers pouring into first-run cinemas to take in major new films instead of staying home to watch the small screen, contributing to a 20 percent drop in sales, the Chicago Tribune reported Saturday.

"The main issue (for Blockbuster) is that same-store sales were worse than expected and there's a concern about how long it will take them to get back on track," Arvind Bhatia, an analyst at Stern, Agee & Leach, told the newspaper, adding he believes Blockbuster has a year of breathing room because it succeeded in temporarily renegotiating the terms of its $922.5 million of debt.

Blockbuster Chief Executive Officer Jim Keyes told analysts in a conference call Thursday that with 3 million more people going to the movies each week so far this year compared with the same weeks in 2008, DVD rentals are being pummeled.