Well, at least they won’t have to pay late fees on that.

Unable to fight shifting consumer preferences that have seen online (Netflix) and kiosk (Redbox) based DVD rentals become the standard, the world’s largest multi-national movie rental company officially declared bankruptcy today.

“The company listed assets of $1.02 billion against debt of $1.46 billion on a Chapter 11 petition filed today in U.S. Bankruptcy Court in New York. The company said it reached a deal with a group of bondholders on a plan of reorganization and secured a $125 million loan to finance operations.” {Bloomberg}

If you can’t remember the last time you had a Blockbuster night, you’re likely not the only one. While going to the video store used to be a regular occurrence for many, the success of mail-order rentals and in-store kiosks has proven to be too much for the Blockbuster storefront model to compete with, and not just in the US. Blockbuster’s proposed plan for reorganization includes bankruptcy for stores in Italy, Spain and Canada as well. Locations in Argentina will no longer be funded.

Blockuster will undoubtedly try to emerge with a renewed focus on mail-order rentals and other delivery options that don’t have the same overhead as maintaining actual stores. While convenience and monthly subscription models that don’t punish your wallet with late fees is a big part of the appeal of Netflix or Redbox, they have a huge advantage built into their business model. Netflix doesn’t have to spend lots of money on commercial properties or rent, and Redbox doesn’t have to pay for an employee to always be there while you’re deciding on a movie. Ironically, the 25-year-old company that put many small, independent rental stores out of business when entering new territories will have to think like a small(er) independent for a chance at recovery.