() based in
Dothan, Alabama , is the second largest movie and game rental company in the
United States , behind
Blockbuster Video . It rents and sells
DVD s,
Movie Videos , and
Video Games . It has over 4,700 stores in
North America , operating mainly under the and '''Hollywood Video''' brands. The Hollywood Video brand is operated out of
Wilsonville, Oregon .
Movie Gallery was established in
1985 in
Dothan, Alabama by
Joe Malugen and
Harrison Parish . Movie Gallery focused on rural and secondary markets, areas that were typically underserved by other video retailers, notably
Blockbuster Video . The company originally expanded through a franchising model, but all of these franchisees were eventually repurchased by the company.
After growing organically for the balance of the
1980s and the early-
1990s , Movie Gallery began an aggressive growth campaign in the early and mid-
1990s by consolidating the fragmented video retail market through the acquisition of individual video stores and small chains. The company also continued to open new stores.
By , it took over
Videoland stores in the northwest
United States , and acquired the Canadian VHQ chain in 2005. These moves were dwarfed however by its decision to purchase Hollywood Video in early
2005 .
Revenues were $369 million for 2001, $729 million for 2004, and $1,630 million in
2005 (including results from the Hollywood Video acquisition).
, operated from
Wilsonville, Oregon , is a
Video Tape ,
Video Game and
DVD Rental Shop chain in the
United States . Created in
1988 by former CEO
Mark Wattles , it was the largest direct competitor of
Blockbuster Video , until its purchase by Movie Gallery. It also operates
Game Crazy departments within its stores (and a few free-standing locations), which are dedicated to buying, selling and trading video games and related items. Employees of Hollywood Video are expected to memorize and live by the mission statement, "Hollywood is dedicated to exceptional guest experiences delivered with genuine warmth and friendliness".
Hollywood Video was the target of a
Hostile Takeover attempt, initially announced at the end of
December 2004 by competitor
Blockbuster Video . In
February 2005 , Blockbuster announced an exchange offer of $14.50 per share ($11.50 cash and $3.00 in Blockbuster shares)
{Link without Title} .
In order to create a stronger position against the hostile takeover, Hollywood Video agreed to a buyout on Monday,
January 10 ,
2005 by its smaller competitor
Movie Gallery . Movie Gallery paid $860 million, $13.25 per share, and the assumption of $380 million in debt. Stocks closed at $13.85 on January 10th after this news. Blockbuster then dropped its purchase plans, citing anti-trust concerns. Movie Gallery completed its purchase of Hollywood Video on
April 27 ,
2005 .
Today, Movie Gallery operates about 2,400 and 2,000 '''Hollywood Video''' locations in the United States. Approximately 650 of the Hollywood locations include Game Crazy departments, and there are around 20 separate Game Crazy stores. Canadian operations include over 200 "Movie Gallery" branded stores, as well as approximately 60 under the VHQ brand in western
Canada . There are also 9 stores in
Mexico .
The "Movie Gallery" and "Hollywood Video" brands target have quite different target markets (smaller rural vs. urban/suburban), store size (3000-4000
Square Feet vs. 4000-6000) and inventory (3000-15000 items vs. 25,000). For this reason Movie Gallery will be maintaining the Hollywood brand and store format, and the two brands currently maintain separate management operations teams. Game Crazy operations report through Hollywood managers at the regional level.
The first year following the Hollywood purchase saw financial difficulties for Movie Gallery. The acquisition incurred significant debt obligations, and the company also pointed to a mature video store industry, lackluster performance of the new movie releases during the year, and various other factors. The company posted a net loss of over $500 million for 2005, mainly due to a number of one-time charges ("impairment of
Goodwill ") relating to the valuation of the company. The stock price, which was in the $28 range in April 2005, and briefly touched over $34 later in the year, dropped precipitously in the following months, spending most of 2006 below $5. The company's financial situation also forced it to negotiate the relaxation of various terms in its debt arrangements
{Link without Title} . In response, Movie Gallery has announced initiatives to reduce store sizes, sublease some existing space within stores, and reduce or eliminate new store openings (although the previously planned 140 new stores for 2006 are unaffected).
To compete in a growing video game market, Hollywood Entertainment launched a
Store-within-a-store concept called Game Crazy which features the ability to buy, sell, and trade video games, systems, and accessories inside of Hollywood Video stores. Game Crazy offers gamers the ability to try any game before they choose to purchase or rent. Most Game Crazy stores do not sell
Computer Games (except for exclusive, nationally high-demand titles) but offer a wide selection of older game systems and games, including
NES ,
Sega Genesis ,
Super Nintendo ,
Dreamcast , and
Nintendo 64 systems. However, the future of such older games at Game Crazy is in doubt, as buy-back prices have radically dropped and some games are no longer in the system (a sure sign they will no longer purchase them at all in the near future). Game Crazy, unlike their competitors, also does not offer cash for games, simply store credit.
One of the primary features of Hollywood Video rentals is a universal returns system:
- All rentals (DVD, VHS, and Games; New Release and Film Library) are five days, every day (some Hollywood Video locations do offer ten day rental on Game Vault game titles).
- Returns are always due at 11:59 PM (the closing time of most stores).
Hollywood Video, under pressure from competitor's movie passes, recently introduced a program called the "Movie Value Pass" which allows customers to rent unlimited amounts of movies. The pass allows customers to have up to three movies checked out for free at any one time. The major restrictions on the pass are that customers must wait an average of four to eight weeks for new releases to be added to the list of MVP available titles. Customers are also still limited to five day rentals and will pay late fees on their free rentals if they are not returned on time. A MVP Premium was started in
November 2005 that allows customers to rent any movie in the store for a maximum of ninety days. The difference between the two MVPs is that Premium costs either $24.99/month or $29.99/month in order to have either two or three free movies out at a time, respectively. With MVP Premium there are not late fees as long as the promotion is active on your account (maximum of ninety days).
To sign up for an account, Hollywood Video requires that those wishing to become members must have a valid piece of government issued identification. Also required is either a debit or credit card - in the event that a movie is 60+ days overdue the balance will be charged to the card. If the customer does not have a debit or credit card, proof of auto insurance or a utility bill with the same address as the I.D. shown can be used. Customers must be at least 18 years of age (or legally emancipated) and have a working telephone number. I.D. must be shown every time a customer wants to rent a movie or change information on their account.
