(Blockbuster article updated with stock price movement.)

NEW YORK (

TheStreet

) --

Blockbuster

(BBI) - Get Report

rival

Movie Gallery

filed for bankruptcy on Wednesday and plans to shutters a "significant number" of stores.

This is the second time in less than three years Movie Gallery has been forced to run from creditors.

The prospect of a thousand stores being eliminated from Movie Gallery's portfolio, which includes Hollywood Video stores, could be a consolation for investors who have been watching Blockbuster suffer.

As a result, Blockbuster is climbing 7% to 46 cents in morning trading.

In January, Blockbuster said its fourth-quarter earnings came in lower than expected due to weak holiday sales.

Blockbuster now expects a loss between $183 million and $193 million.

Movie rental stores like Blockbuster and Movie Gallery have, of course, faced increased competition from streaming and mail-service provider

Netflix

(NFLX) - Get Report

and kiosks from

Coinstar

(CSTR) - Get Report

.

-- Reported by Jeanine Poggi in New York.

RELATED STORIES:

>>Market Missing Point on Blockbuster?

Follow TheStreet.com on

Twitter

and become a fan on

Facebook.

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.