Blockbuster’s new owners Gordon Brothers are locked in discussions with landlords about securing better terms as the restructuring firm plans to launch into music at the entertainment specialist.

Blockbuster is to expand into related categories including music and accessories such as headphones to drive sales, according to Gordon Brothers Europe chief executive Frank Morton.

Morton acknowledged that sales of physical products in both DVDs and music are in decline, but said: “It’s a predictable decline. It doesn’t just shut off like a faucet shuts off.”

However, Blockbuster will not be launching an online streaming service to rival Lovefilm or Netflix, according to Morton, who said digital rights for the brand are still controlled by former parent Dish in the US.

“Right now we have no plans to develop a digital offer. We continue to work with [Dish] on that,” he said. “We have an online presence, but our focus is on the retail offer. It is a sector in transition, no doubt about it, but there are still customers going into stores, around two million I think.”

Customers can currently pay online for DVDs and games to be posted to them.

Gordon Brothers acquired Blockbuster out of administration on Saturday, saving 2,000 jobs. The retailer collapsed into administration in January following intense competition with online operators including Lovefilm.

Morton said he was attracted to Blockbuster because he believed “there’s a market to be served”.

He said that all 264 stores acquired in the deal “are profitable, assuming we can have a dialogue with landlords”. He declined to say what kind of concessions he was asking for.

Morton said Gordon Brothers, who has drafted in former HMV commercial director Gary Warren to lead the business, would succeed where the previous owner failed because it is operating in a sector that “has lost a lot of coverage” due to store closures at both HMV and Blockbuster stores. Blockbuster had 528 UK stores when Deloitte was appointed administrator in January.

Morton admitted he did not know what the business would look like in five years time. “I wish I had a crystal ball. We’ll continue to change with the times, we’ll improve the product offering and continue to look at the store portfolio,” he said.

Gordon Brothers has made a “substantial” investment in Blockbuster which Morton said will be spent on getting inventory into shops as well as launching into new categories.