Rex
The firm, which has 528 shops in the UK employing 4,190 staff, has appointed accountancy firm Deloitte as its administrators.
The stores will keep trading while the administrators try to find a buyer - and gift vouchers WILL be honoured.
It becomes the third high street chain to collapse already in 2013 following on from Jessops and HMV.
Deloitte said Blockbuster had been affected by competition from online streaming services such as Netflix and Lovefilm.
Lee Manning, joint administrator and partner in Deloitte's restructuring services practice, said: "In recent years Blockbuster has faced increased competition from internet-based providers along with the shift to digital streaming of movies and games.
"We are working closely with suppliers and employees to ensure the business has the best possible platform to secure a sale, preserve jobs and generate as much value as possible for all creditors."
Deloitte stressed Blockbuster's core business was profitable and they would be looking for a rescue deal for all or part of the business as a going concern.
It will continue to accept gift cards and credit bought through its trade-in scheme for second-hand movies and games, as well as operating its loyalty scheme.
Blockbuster's US parent went bankrupt in 2011, but was rescued by US pay-TV provider Dish Network in a £200 million deal, which saved hundreds of stores from closing and prevented tens of thousands of US job losses.
The UK group has branched out in recent years with online rentals and a trade-in service for pre-owned titles.
Nearly 1,400 jobs at photographic chain Jessops were lost last week with the shock closure of all its stores.
Around 4,350 workers at music retailer HMV face a nervous wait while administrators try to find a buyer for the 239 stores.
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