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Failing to adapt to how viewers want their content, video and game rental chain Blockbuster filed for Chapter 11 protection today in Manhattan, reports Reuters and numerous financial outlets.

Failing to adapt to how viewers want their content, video and game rental chain Blockbuster filed for Chapter 11 protection today in Manhattan, reports Reuters and numerous financial outlets. Blockbuster, which has a long history of renting video games, was once the No. 1 video rental business in the United States.

But as Netflix and GameFly chipped away at their business with rentals through the mail and online streaming over PCs, and eventually video-game consoles (Netflix is now available on PS3, Xbox 360, and the Wii), Blockbuster found itself unable to keep up, even though it offers mail delivery and online (and even mobile) streaming services. Blockbuster also saw competition with low price, nonmembership rentals such as Redbox kiosks in supermarkets.

GameFly, Blockbuster's main competitor game rental market, filed compliant with the US Postal Service alleging that the post office gave preferential treatment to mailings from Blockbuster and Netflix. GamePro contacted GameFly for comment on Blockbuster's Chapter 11 filing and are still awaiting a return call.

Founded in 1985, Blockbuster's Chapter 11 petition includes plans to cut its debt from $1 billion to around $100 million. The chain shut down a number of stores in recent years but still has about 3,000 locations in the US.