Blockbuster (BBI) is a terrible company and stock. After perusing the third-quarter report, published Friday after the bell, I don't see any reason to modify such a rough statement.

Sorry about that, but what else can I say about a huge revenue decline and a wider loss coupled with a story that continues to deteriorate? According to the Q3 earnings release, Blockbuster experienced a 21% drop on the top line. On an adjusted basis, the company lost 20 cents per share, compared to 9 cents per share in the comparable period a year ago. Helping to drive this abject performance was a 14% contraction in same-store sales.

So here's the deal. Hollywood studios have been increasing unhappy about the decline in DVD sales. One might paraphrase the Oscar-winning Network and say they are mad as heck, and can't take it anymore. In the first half of 2009, U.S. retail sales of DVDs dropped 13.5%, while DVD rentals rose by 8.3%. People are being non-committal with their televised entertainment, preferring to watch once and ship back rather than purchase for their permanent collection.

The studios' solution? Delay their audience's gratification, making new releases available only for purchase for the first few weeks. People counting on seeing new flicks on Netflix (NFLX) or via Coinstar's (CSTR) Redbox service would just have to wait ... or buy the movie, which is what studios are hoping for.

Coinstar's (NASDAQ: CSTR) Redbox, a convenient movie-rental kiosk, has really shaken things up in the media industry. BloggingStocks has covered recent events surrounding this asset: Zac Bissonnette wrote an article earlier in the month discussing the subject of litigation with certain studios, and Brent Archer covered a possible options play connected to a deal with Viacom (NYSE: VIA).

I won't rehash all of the details, but let me boil it down to the salient issue: studios such as Disney (NYSE: DIS), General Electric's (NYSE: GE) NBC Universal, and Time Warner (NYSE: TWX) are all worried about the devaluation of physical media. Redbox charges a single dollar per day for a DVD rental. This frightens content makers. Executives at these companies believe that discs must be defended since they are an important way of amortizing costs associated with making films. Even those entities that have decided to engage the Redbox model probably aren't happy about it. Lions Gate (NYSE: LGF) surely doesn't enjoy the deflation of the DVD, but it is playing ball nevertheless.

Coinstar (NASDAQ: CSTR - option chain) shares are rising today after the company signed a supply deal with movie studio Paramount Pictures, a unit of Viacom (NYSE: VIA, VIA.B). Under the deal, CSTR's subsidiary Redbox will stock its $1-per-night DVD rental kiosks with Paramount Pictures DVDs. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on CSTR.

CSTR opened this morning at $32.55. So far today the stock has hit a low of $32.51 and a high of $34.49. As of 11:40, CSTR is trading at $33.12 up 83 cents (2.5%). The chart for CSTR looks neutral and S&P gives CSTR a neutral 3 STARS (out of 5) hold ranking.

Redbox, a division of Coinstar, Inc. (NASDAQ: CSTR), has sued Warner Home Video over that company's decision to delay the DVD kiosk rental chain's access to its new releases. That lawsuit follows similar suits against Universal and 20th Century Fox, both of which also have sought to delay Redbox releases to preserve demand for higher margin retail sales.

"Redbox remains committed to providing our customers the new release DVDs they want, where they want and at the low price they want," Redbox President Mitch Lowe said in a statement.

Here are some highlights from last week's earnings coverage from BloggingStocks:

• Activision Blizzard Inc. (NASDAQ: ATVI) reported better-than-expected Q2 results, sending shares higher.
• Blackstone Group (NYSE: BX) said it swung to a Q2 profit despite a dearth of leveraged buyouts.
• CBS Corp. (NYSE: CBS) Q2 earnings declined but still topped estimates, sending shares higher.
• Coinstar Inc. (NASDAQ: CSTR) reported stellar Q2 results driven by its the popularity of RedBox.
• Clorox Co. (NYSE: CLX) posted solid Q4 earnings but said revenues were flat due to currency effects.
• Duke Energy Corp. (NYSE: DUK) lower Q2 earnings beat expectations by a penny but revenue fell short.

Not that long ago, Coinstar (NASDAQ: CSTR) was a sleepy business. Its retail kiosks helped with the mundane tasks like coin counting, money transfers, and so on.

However, the company has redefined its vision -- considering itself a big player in the automated retail category. And, it looks like the key to the strategy is its DVD rental kiosk platform, Redbox.

As seen with the latest quarterly results, Redbox is propelling growth. Revenues spiked 43% to $314 million, with profits going from $2.7 million, or $0.09 per share, to $7 million, or $0.23 per share. For the year, Coinstar expects revenues of $1.225 billion to $1.3 billion. Profits are forecasted at $0.80 to $0.86 per share.

Netflix (NASDAQ: NFLX) released its Q2 report on Thursday after the bell. You had to like what you saw. Revenues increased 21%. Total subscribers went up 26%. Growth in net subscribers on a year-over-year basis was impressive, as was the increase observed in the gross margin. Free cash flow was up. And now for the final piece of the performance puzzle: adjusted earnings per share increased 29% to 58 cents. Very good.

Consumers have really taken to the Netflix model. They love getting DVDs by mail. And Netflix has really done a job on its major competitor, Blockbuster (NYSE: BBI). No doubt about it, I'm sure a lot of Blockbuster shareholders are wishing they were invested in Netflix.

Netflix (NASDAQ: NFLX) CEO Reed Hastings says his biggest competitor isn't the one that his company is most often grouped with. It's not Blockbuster (NYSE: BBI), the largest brick-and-mortar rental chain, and it's not the internet -- where technological gains are making streaming video the wave of the future.

No, according to Mr. Hastings, the biggest competitor is Coinstar (NASDAQ: CSTR), the coin counting business that also happens to own Redbox, the network of 15,400 vending machines that rent movies for $1 per night. Redbox is installing another machine every hour.

General Electric Company's (NYSE: GE) NBC Universal movie studio is is duking it out with Redbox, the DVD rental kiosk business owned by Coinstar (NASDAQ: CSTR).

Basically, Universal doesn't like that Redbox is renting out its movies for $1 per night, and thinks its hurting its retail sales and those of Blockbuster Inc. (NYSE: BBI) which splits a chunk of its revenue with the studio.

Universal threatened to stop selling its movies to Redbox but, like the petulant little upstart that it is, Redbox just went ahead and bought them from other sources -- and sued Universal for antitrust violations and misusing copyrights. Universal has asked the court to throw out (subscription required) the lawsuit.

Universal has said that it wants Redbox to stock its DVDs no earlier than 45 days after they hit traditional retailers -- but Redbox isn't having it.

There's no question that consumers will be rooting for Redbox in this one: If Redbox wants to buy movies and rent them out for $1 per night, it doesn't really seem like Universal should be able to stop them.

To get codes for free Redbox rentals, click here.