The second-quarter loss compares with a profit of $48.6m a year earlier.
Blockbuster is suffering at the expense of having to win customers online from rivals such as Netflix, Amazon.com, LoveFilm and Video Island among others.
Blockbuster said revenues were also down falling 1.6% to $1.4bn. It also said that a slew of poor Hollywood blockbusters, such as flops like 'Alexander', had played their part in reducing rental demand.
Blockbuster has also been hit by retailers offering bundles of cheap DVDs with offers at the likes of HMV giving consumers three titles for around 拢20.
In the US, Blockbuster has now responded by putting up its prices to match those of Netflix as it tries to claw back revenues.
In the UK, the online rental market is getting ever more competitive -- last month cinema chain Vue Entertainment launched its Vue at Home online DVD rental service.
The service is being run in conjunction with Screenselect.co.uk and makes it the first cinema chain to enter the market.
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