The ratings on Blockbuster Inc. reflect the risks of operating in a mature and declining video rental industry, the company's dependence on decisions made by movie studios, its high leverage, and the technology risks associated with delivery of video movies to the home. These risks are partially mitigated by Blockbuster's dominant market position in the video rental industry, good cash flow generating capabilities, a healthy store base, and geographic diversity. Blockbuster is the number-one player in the mature and fragmented $8.2 billion video rental market, with a 39% share in 2003. The company has a 15.2% share of the overall home video industry. Hollywood Entertainment, its closest competitor, has about a 13% share in the rental market. Over the past
