(Blockbuster article updated with stock price movement.)

NEW YORK ( TheStreet) -- Blockbuster ( BBI) 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.


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