Blockbuster may not be teetering on bankruptcy, but the movie retailer is so cash-strapped that it can’t afford to move forward with its plan for a flashy redesign of all its stores—something CEO Jim Keyes acknowledged that it needs to do to stay competitive.

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Last year, Blockbuster (NYSE: BBI) started revamping stores in states like Texas and Nevada, trying to grow from just selling DVDs and movies into a full-scale entertainment retailer. Dubbed “Rock the Block,” the concept stores featured everything from latte counters and kid-friendly video game hubs, to tech lounges selling flat-screen TVs (via The Dallas Morning News). The company had transitioned all of its stores in Reno, Nev., but according to Home Media Magazine, Keyes said the economy was forcing it to put the brakes on expanding to other cities. Analysts say postponing the redesign could save Blockbuster between $65 million to $75 million in store remodeling expenses. 

But Blockbuster needs to do something to stay relevant, given that competitors like Netflix, Redbox and GameFly (for video games) continue to gain market share with their mail-order, on-the-spot and digital distribution services. Keyes conceded that Blockbuster had a great deal of competition, but called digital downloads the “shiny new toy” and pooh-poohed Netflix’s subscription business as “one small segment” of the industry. He also argued that the company’s business represented about $1 billion in annual revenue for the studios, money even media conglomerates like Sony and Fox couldn’t ignore given the current economy.

Photo Credit: Steve Brandon