I was in Blockbuster this weekend. I had not rented a movie in over a year an a half. Two DVDs for $9. Whatever! Rip off! And they had very little selection.
That's because BB was still trying to push the VHS market instead. BB didn't keep up with current home video trends in the adoption of the DVD format.
I'm amazed that there are still as many video stores around. My town's loaded with them, including three Blockbusters (four if you count one just across the city line in a neighboring community).
Our cable system has Video on Demand, dozens of PPV channels, Showtime on Demand, HBO on Demand, etc., plus you can buy DVDs at Best Buy, Wal-Mart, and dozens of places cheap. Heck, and half the supermarkets in town rent DVDs.
I really don't see how Blockbuster can survive. It's simply technologically becoming obsolete.
Go to a place like Hollywood Video, and you'll find a very small selection of VHS rentals, and the rest of the place packed with DVD's.