(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)and kiosks from Coinstar ( CSTR).

-- Reported by Jeanine Poggi in New York.

RELATED STORIES:

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 This material may not be published, broadcast, rewritten, or redistributed.

If you liked this article you might like

Blockbuster Tries to Lure Netflix Customers

Dish Has Funny Plans for Blockbuster

Dish Has Funny Plans for Blockbuster

Netflix Dishes About Blockbuster Deal

Netflix Dishes About Blockbuster Deal

Dish Network's Blockbuster Bid Approved

Dish Network's Blockbuster Bid Approved

March Retail Sales: Live Blog

March Retail Sales: Live Blog