TORONTO - Bargain hunters scoured shelves at many of Canada's Blockbuster Video locations Friday, as nearly 150 stores set for closure began clearing out DVDs and video games at deeply discounted prices.

The movie rental chain, which is in receivership, began liquidation sales at 146 Canadian locations that are scheduled to be shut down in June.

A steady stream of shoppers seeking first pick of stock was greeted with signs saying "Everything Must Go" at one downtown Toronto Blockbuster locations.

Another location was so busy by mid afternoon that a long lineup of customers snaked around the store -- some shelves had already been stripped bare.

Deal hunters picked over the merchandise, while yellow signs emblazoned with "30 per cent off," lured them to search through more shelves and bins.

Several customers walked out with stacks of stock they could barely carry.

The discount prices are not much different from Blockbuster's usual sales. The company regularly offered either 30 per cent off used DVDs or "buy two, get one free" offers on other previously viewed merchandise.

But the key difference is that all the stock is on sale, with clearance prices extending to new DVDs, candy, toys and even ice cream and pop.

Tony Leonardo said he rushed to his neighbourhood store on College and Crawford streets in Toronto when he heard the news of the closures, in hopes that the location isn't on the chopping block. He found that it is.

He's been a regular customer for years and had built a relationship with the staff members who he praised as friendly and knowledgeable.

"It's very gloomy for the staff," Leonardo said, explaining they lamented about getting layoff notices last Friday. Some told him they were not sure where to look for other work.

"They're sad and in shock. It's almost like going to a funeral," he said.

About 1,400 Blockbuster staff could lose their jobs in Canada, but the receiver in charge of selling the company has not given exact numbers.

A court has ordered Blockbuster Canada be sold to pay off US$70 million in debts racked up by its former U.S. parent. The receiver in charge of selling it is closing down about a third of the stores.

Ontario will have the most closures, but every province will lose at least one Blockbuster location, with stores set for closure not accepting gift cards.

Shopper Jason Ahola said he went to the store the day the three week liquidation sale began to get first pick. He walked away with about 25 classic movies like "Jaws," "The Godfather," and "Apocalypse Now," for about $175.

"It's a little ironic. I seem to remember all the little mom and pop video stores (Blockbuster) put out of business when they swept through," he said.

Nearly every customer who stopped to chat outside one Toronto location spoke of how sad they were that the store is closing, and blamed both legal and illegal Internet movie websites, and other technology for effectively killing the video store rental industry.

For every customer that said they normally buy their DVDs for next to nothing in nearby Chinatown, six more said they would miss the physical neighbourhood video stores.

Customer Amy Fedrigo said she often shops at Blockbuster on her lunch break because she doesn't want to download movies over the Internet.

She said she wasn't surprised that Blockbuster was closing a third of its locations.

"So many people are ripping stuff off on the Internet now and Blockbuster's not really flexible with its price and everyone I know, if they do rent videos, go to independently owned stores."

Blockbuster Canada was placed into receivership by an Ontario court this month in the face of US$70 million in claims from various movie distributors, including Hollywood studios that provide its DVDs, and other suppliers.

The Canadian operations had acted as a guarantor for Blockbuster's U.S. business, which went into bankruptcy protection in September and was later auctioned off for US$320 million to American satellite TV provider Dish Network Corp. (Nasdaq:DISH).

Blockbuster's clearance sale began Friday so independent video stores are not yet reporting an increase in shoppers, though Howard Levman, who has owned Toronto store Queen Video for 30 years, said he expects the Blockbuster closures to only benefit the little guys in the short term.

He explained that movie studios who provide DVDs may not see physical stores as worth their while with a big customer like Blockbuster slowly shrinking.

"Without the thousands of Blockbusters out there to buy these films, I'm guessing the studios will probably accelerate their efforts to make up that difference and get the movies directly to the consumers through digital means," he said.

But he is optimistic that the industry is "pretty resilient" because movie watchers will always prefer face-to-face contact.

"When they get to the store they're often helped by somebody who is aware of what they might enjoy and you can't recreate that experience online. The industry's going to survive, it'll just be smaller."

The entire list of store closures is available at http://bit.ly/lo06yS