NEW YORK ( TheStreet) -- There's no denying that Blockbuster ( BBI) is listing -- and Blockbuster CEO James Keyes, to his credit, didn't attempt to deny it during an exclusive interview with TheStreet.

Competition from Netflix ( NFLX) and Coinstar's ( CSTR) Redbox, has intensified, stealing market share away from Blockbuster and forcing it to rethink its entire operational strategy.
James Keyes
Blockbuster CEO James Keyes

In an effort to cut costs, Blockbuster previously said it plans to shutter 20% of their stores by 2011, leaving about 3,200 stores from 4,356 locations in the fall.

It's easy to see why Blockbuster needs to resort to such measures. Last month, the company revealed that fourth-quarter earnings came in lower-than-expected due to weak holiday sales. As a result, it now expects a loss of $183 million to $193 million for fiscal 2009.

And earlier this week, Blockbuster took another blow when billionaire investor Carl Icahn said he was retiring from the company's board of directors. Icahn said he was resigning because of Institutional Shareholder Services guidelines regarding the number of directorships a person can hold.

Blockbuster's stock has paid the price, losing 71% since its 52-week high of $1.56.

Elsewhere in the sector, privately-held Movie Gallery filed for bankruptcy this week and said it would close nearly 800 stores. The news was viewed, by the markets, as a positive for Blockbuster -- based on the elimination of Blockbuster's competition. But it also could foreshadow Blockbuster's fate.

In light of all this, TheStreet spoke with CEO James Keyes to see just how he plans to revive the company and fend off bankruptcy, which experts debate could come this year. Keyes took the reins at Blockbuster in 2007 and previously served as chief executive of convenience store 7 Eleven.

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