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Open Thread: How Could Blockbuster Reinvent Itself to Become Relevant Again?

After succumbing to bankruptcy under its $900 million debt, Blockbuster has started a search for a new CEO. Its embattled chief executive Jim Keyes, who failed to keep pace with digital competitors such as Netflix, could be replaced before the year's end. Who should Blockbuster replace him with? And, more importantly, how should the company re-make itself?

While Blockbuster is still considering keeping Keyes in his current capacity, sources told the Wall Street Journal that he "won't be running it much longer" and that "there is going to be a real search here." People familiar with the matter say the company's new CEO would need expertise in digital content delivery, with potential candidates including former Amazon, Google, and Yahoo execs.

Central to the selection process must be a new company direction. Keyes attempted to do too much with the company, and took on too many competitors: Netflix for subscriptions, Redbox for kiosks, not to mention Apple, Amazon, and Comcast for its on-demand service. The company also suffered heavily under Keyes' stubborn commitment to its bricks-and-mortar business, which became unviable in the digital age: Customers wanted access to movies on their iPhones, iPads, Nintendo Wii's and Xbox's. Driving to the store became archaic and unsustainable.

To emerge from Chapter 11 bankruptcy, Blockbuster must undergo serious restructuring. What should it return as?

Here's one suggestion: Farhad Manjoo recently recommended that Netflix and Hulu merge, but how about Blockbuster and Hulu? If Blockbuster shutters its thousands of stores, its vast DVD inventory could provide Hulu with a by-mail service to rival Netflix's and make its $9.99/month premium service far more appetizing. Hulu CEO Jason Kilar could become head of the merged company.

Sound crazy? To succeed, Blockbuster must reinvent itself. So get creative, Fast Company readers: tell Blockbuster what to do next.