You are expressing what some of us have been thinking for a long time. Blockbuster was already losing my biz before Netflix and effectively lost it for good once we started.
I do find it interesting that Movie Gallery, Hollywood and Netflix all reaffirmed guidance today in the face of Blockbusters reversal. The fall in the other stocks nevertheless reaffirms my resolve to move a fair share of my investment dollars to the sidelines. I'm completely out of Netflix at the moment despite being a long term bull on the company - too often I see sector and market problems beat up good companies lately. It seems the immediate reaction to bad news one place is often a sell-off to similar companies. It takes a while to settle it out - sometimes a long while.
My long term views of the overall market remain poor. I'm not sure what it will take to turn my sense around.