Hollywood Video

Hollywood Video was the consumer-facing brand of Hollywood Entertainment Corp., an American video-rental retailer founded by Mark Wattles in 1988. Based in Oregon, the chain developed from a small Portland store into one of the largest rental businesses in the United States and became the most prominent direct competitor to Blockbuster in many urban markets. Its stores primarily rented VHS videocassettes and later DVDs, while also selling selected home-entertainment products and operating related retail concepts. The business originated in Wattles's experience using a VCR as an inexpensive form of entertainment. In 1985, he borrowed money to open Home Theater, a small Portland rental shop stocked with approximately 300 films. The venture provided the foundation for Hollywood Entertainment, which Wattles formed in 1988. The company expanded beyond Oregon into Washington, California, Nevada, Texas, and additional states, using large-format stores with broad inventories and substantial quantities of popular titles. By the mid-1990s, Hollywood Video locations commonly occupied thousands of square feet and held extensive tape libraries. The company also acquired regional chains, including Video Watch, and operated some stores under names such as Video Park and Video Central. Hollywood Entertainment became a public company in 1993, when it operated 16 stores. Public-market access supported an aggressive expansion program, including plans for hundreds of additional locations. The company competed with Blockbuster through store growth, title availability, and an urban-market presence. In 1995, Blockbuster sued Hollywood Entertainment over the hiring of five former Blockbuster employees, alleging that they possessed trade secrets. A judge rejected Blockbuster's request for relief after finding that irreparable harm had not been demonstrated. The company was also an early adopter of changing home-video formats and distribution channels. Hollywood Video was among the first major rental chains to introduce DVD rentals in its stores in the late 1990s. In July 1998, Hollywood Entertainment acquired online movie retailer Reel.com in a transaction reported at approximately $100 million. Reel.com continued to operate separately and gave Hollywood a digital-commerce presence at a time when internet retailing was beginning to reshape the home-entertainment market. Hollywood also entered the video-game retail sector by establishing GameCrazy, seeking to diversify beyond film rentals. The rise of video-on-demand, DVD-by-mail services, online purchasing, and other digital alternatives placed increasing pressure on the physical rental model during the 2000s. Hollywood Entertainment began recording losses as consumers gained access to more convenient forms of home entertainment. At the end of 2004, Blockbuster attempted a hostile takeover with a cash-and-stock exchange proposal. Hollywood responded by agreeing to be acquired by Movie Gallery, a smaller competing rental chain. Movie Gallery completed the acquisition on April 27, 2005, paying approximately $860 million and assuming approximately $380 million in debt. Hollywood Video became a Movie Gallery subsidiary and retained its Oregon headquarters for a period. The acquisition initially strengthened Movie Gallery's reported business, but the debt assumed in the transaction contributed to its financial deterioration. Movie Gallery filed for bankruptcy protection in 2010, and the Hollywood Video store network was liquidated. The final United States store closed on July 31, 2010; the final Canadian store closed on August 8, 2010. The Hollywood Video website was later relaunched in December 2011 as an entertainment-news and movie-content site rather than a rental-store platform. The brand's physical retail operations are defunct, although the website has continued to publish or host entertainment-related material.

Hollywood Video's origins trace to Mark Wattles's effort to create an inexpensive entertainment business in Portland, Oregon. After leaving college and experiencing financial difficulty, Wattles and his wife used a family-provided VCR for home entertainment. He concluded that other households might also value affordable access to movies and borrowed money to open Home Theater, a roughly 500-square-foot rental shop in downtown Portland in 1985. The store carried about 300 films and became the starting point for a larger enterprise. Wattles incorporated Hollywood Entertainment in 1988 and served as its president and chief executive. Hollywood Video stores expanded through the Pacific Northwest and then into states including California, Nevada, and Texas. The company pursued a large-store format with extensive inventories, allowing it to stock many copies of popular releases. In 1993, when it operated 16 stores, Hollywood Entertainment completed an initial public offering. The resulting access to public capital supported rapid geographic growth. By 1994, the typical store was reported to occupy about 7,500 square feet and hold approximately 16,000 tapes. The company planned a substantial increase in store count during the following years. Hollywood's expansion included acquisitions and alternative store banners. In 1995, the company operated locations in 11 states and announced plans to substantially increase its store base. It acquired the 42-store Video Watch chain in the Midwest for a reported $59 million and also operated locations under the Video Park and Video Central names. The company planned additional growth in Michigan and elsewhere. In 1996, it established regional offices in the Chicago, Houston, and San Francisco Bay areas as its operating footprint broadened. Competition with Blockbuster was a defining feature of Hollywood Video's development. Blockbuster was much larger, but Hollywood became a significant direct competitor, especially in urban markets. In January 1995, Blockbuster sued Hollywood Entertainment after Hollywood hired five former Blockbuster employees, arguing that the employees might possess confidential trade information. In May of that year, a judge ruled in Hollywood's favor because Blockbuster had not established irreparable harm. The late 1990s brought format and distribution changes. Hollywood Video was among the first major rental chains to introduce DVD rentals in its stores. In July 1998, Hollywood Entertainment acquired Reel.com, an online movie retailer, in a deal reported at approximately $100 million, including about $30 million in cash for Reel's stockholders. Reel.com was intended to continue independently, first under Julie Wainwright and later under Jeff Jordan. Hollywood also created GameCrazy, a video-game retail concept designed to diversify the company as the video-rental market matured. The physical rental model came under pressure in the early 2000s. Video-on-demand, DVD-by-mail, online purchasing, and eventually digital streaming reduced the need for customers to visit rental stores. Hollywood Entertainment began experiencing losses, and its diversification efforts could not fully offset the structural decline in store-based rentals. At the end of December 2004, Blockbuster announced a hostile takeover attempt through an offer combining cash and Blockbuster shares. Hollywood Video sought an alternative transaction and agreed in January 2005 to be acquired by Movie Gallery, a smaller rival. Movie Gallery paid approximately $860 million and assumed approximately $380 million of Hollywood's debt. The acquisition closed on April 27, 2005, making Hollywood Video a subsidiary while initially preserving its Oregon base. The transaction increased Movie Gallery's scale but also added significant financial obligations. The debt burden, combined with the declining rental market, contributed to Movie Gallery's later bankruptcy. Hollywood Video's stores were ultimately liquidated. The last United States store closed on July 31, 2010, and the final Canadian store closed on August 8. In December 2011, hollywoodvideo.com returned as a movie-news and entertainment-content website. Its original concept included automated social scoring and links to external articles, although the automated component was later removed in favor of editorial blogging. The physical chain remains defunct, while the website represents a limited digital afterlife for the former retail brand.

• 2011

  Website becomes entertainment-news platform

  [1]Hollywood Videoen.wikipedia.org

  Hollywoodvideo.com is relaunched as a movie and entertainment news website.

• 2010

  Physical retail operations end

  [1]Hollywood Videoen.wikipedia.org

  The final Hollywood Video stores in the United States and Canada close during the liquidation of Movie Gallery's retail operations.

• 2005

  Movie Gallery acquisition closes

  [1]Hollywood Videoen.wikipedia.org

  Movie Gallery completes its acquisition of Hollywood Entertainment, making Hollywood Video a subsidiary.

• 1998

  Reel.com acquisition

  [1]Hollywood Videoen.wikipedia.org

  Hollywood Entertainment acquires online retailer Reel.com, extending the company into internet-based movie commerce.

• 1995

  Video Watch acquisition

  [1]Hollywood Videoen.wikipedia.org

  Hollywood Entertainment buys the 42-store Video Watch chain to accelerate expansion in the Midwest.

• 1993

  Hollywood Entertainment becomes public

  [1]Hollywood Videoen.wikipedia.org

  The company completes its initial public offering while operating 16 stores.

• 1988

  Hollywood Entertainment is formed

  [1]Hollywood Videoen.wikipedia.org

  Mark Wattles forms Hollywood Entertainment and begins expanding the Hollywood Video store concept.

• 1985

  Home Theater opens in Portland

  [1]Hollywood Videoen.wikipedia.org

  Mark Wattles opens a small video-rental shop called Home Theater, establishing the business that would later develop into Hollywood Entertainment.

A large-format, selection-oriented video-rental retailer positioned as a major alternative to Blockbuster, particularly in urban markets. The brand emphasized broad title availability, numerous copies of popular releases, convenient neighborhood stores, and later expansion into DVDs, online movie retail, and video games.

• Home-video rental · 1988

  VHS movie rentals

  VHS rentals were the core offering during Hollywood Video's formative period. Stores invested heavily in carrying popular films and, for major releases, could stock numerous copies to meet local demand. The large-format store model was built around browsing a substantial physical library and taking titles home for a rental period.

• Home-video rental

  DVD movie rentals

  Hollywood Video introduced DVD rentals in its stores in the late 1990s, making the chain an early major adopter of the format. DVDs offered improved picture quality, compact packaging, and growing consumer demand, but the format shift did not prevent the longer-term decline of physical rental stores.

• Video-game retail

  GameCrazy

  GameCrazy was a video-game retail concept established by Hollywood Entertainment as a diversification effort. It expanded the business beyond film rentals into games and related merchandise, including new and pre-owned products. The concept reflected the company's attempt to use its store network and customer traffic in an adjacent entertainment category.

• Online movie retail

  Reel.com

  Reel.com was an online movie retailer acquired by Hollywood Entertainment in 1998. It continued operating independently after the transaction and gave Hollywood exposure to internet commerce and online movie discovery during the early development of digital retail.

• 2011

  Relaunch the website as an entertainment-news platformStrategy

  Background

  After the physical store network had been liquidated, the Hollywood Video domain no longer represented an operating rental business.

  Action taken

  The website was relaunched as a movie and entertainment news curator, later emphasizing editorial blogging and links to related content.

  Aftermath

  The site preserved a limited online presence for the brand after the retail chain's closure.

  Source

• 2005

  Accept Movie Gallery acquisitionM&A

  Background

  Blockbuster had launched a hostile takeover attempt, while Hollywood Entertainment faced increasing pressure from changing home-entertainment distribution and competition.

  Action taken

  Hollywood Entertainment agreed to be acquired by Movie Gallery for approximately $860 million, with Movie Gallery also assuming approximately $380 million in debt.

  Aftermath

  Hollywood Video became a Movie Gallery subsidiary. The added debt, combined with the declining rental market, contributed to Movie Gallery's later bankruptcy and the liquidation of the store network.

  Acquisition consideration and assumed debt. $860 million consideration plus approximately $380 million debt assumed (2005)

  • Blockbuster — Blockbuster withdrew its proposed acquisition after citing antitrust concerns.

  Source

• 1998

  Acquire Reel.comM&A

  Background

  Internet retailing was emerging as a new distribution channel for movies and entertainment products, while Hollywood Video remained primarily a physical-store business.

  Action taken

  Hollywood Entertainment purchased Reel.com in a transaction reported at approximately $100 million and allowed the online company to continue operating independently.

  Aftermath

  The acquisition provided Hollywood with an online presence, but it did not reverse the later structural decline of physical video rental.

  Reported transaction value. $100 million (1998)

  Source

1. 1Hollywood Videoen.wikipedia.org