Video-Rental Chain "Hollywood Video" Shuts Down Stores

Hollywood Video, a large video-rental chain, has closed more doors today as they shut down more stores due to high competition and other reasons. Hollywood Video was purchased by a smaller company called "Movie Galleries" on April 27th, 2005, whome also purchased Game Crazy and REEL.com at the same time.

The news hit this morning as I wandered into the Hollywood Video store I personally am employed at. There were a couple of other stores being shut down in Suffolk County, New York, and at least 5 other stores being shut down in Nassau County, New York - both of these counties are located on Long Island.

The reasoning was an obvious one -- lack of funds and money to pay off loans and credit issues. Hollywood Video and Movie Galleries knew long ago about their credit and their loan issues, as they couldn't produce enough money to pay loans on-time. As seen in this article here on September 4th, 2007, Movie Galleries had been having it's credit troubles as of lately.

Other reasons that are more obvious include high amounts of competition coming from their biggest store-owned rivals - Blockbuster, as well as the newew hit Netflix. Hollywood Video and Movie Galleries lack their own online-rental name whereas Blockbuster has the "All Access Pass" where you can rent online and return at the store, and Netflix has it's own obvious setup for online renting. The Hollywood Video and Movie Galleries chain actually do, or did have plans to setup an online-renting site, or downloading at least. The company and its description, noted here(as well as a few paragraphs up), states that it was originally owned by Disney, Cisco, and Intel for less than $10 million. Movie Galleries also stated that this program, titled "MovieBeam", would allow customers to download movies for a duration of time.

One other strong argument for the downfall of Hollywood Video and Movie Galleries stores are their policies to integrate the "4 E's", which is easily summarized here, as well as it's consequences:

"As of July 23, 2007, Hollywood Video and Game Crazy partners are expected to adhere to the E4 Program. The four "E"s are Engage, Entertain, Everyone, Every Time. This is a 100% compliance policy which directs every Hollywood Video partner to ask every guest if they would like concessions, an MVP, additional rentals or purchases, and a Play Guard with every rental. The consequences of not following this policy are a written warning and then termination. Oftentimes, many customers become annoyed at the repeated inquiries that they must hear every time they are in the store. No matter how often they visit, they must be asked every time. It is thought that because of the company's financial struggles, it is relying on the "E4" program's success to try and regain some revenue, the irony being that by asking every customer every time, they're driving away their most loyal customers, and the ones who spend the most, and only keeping the customers who come in infrequently. Many employees have quit their positions due to the absurd requirements of such a program". (Wikipedia.org - Hollywood Video)

Another other reasons that have led to this downfall of some stores may also be more sociological, which may be found in some arguments in an article here.

However, several stores are still staying open, generally stores with higher customer traffic and more income. Other Hollywood Video and Movie Galleries stores may have liquidation sales to sell unwanted games, DVDs, and other merchandise within the stores being shutdown.

Hollywood Video's slogan is "We are Hollywood, We are Entertainment". However, "We" are also diminishing.