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Hollywood Video Rental - Hollywood Video Rental Closes Doors

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The downturn in the economy and the changing movie rental industry has claimed yet another victim in the turn against retail video rental stores. Hollywood Video Rental was once one of the largest video rental companies in the world. They were the largest direct competitor of Blockbuster video in several markets. After declaring bankruptcy in February 2010, the parent company of Hollywood Video Rental, Movie Gallery, Inc., announced they were closing their doors and liquidating all assets.

Hollywood Video Rental was founded in 1988 out of Beaverton, Oregon as a rental store for VHS video, DVDs, and home video games. The company began operations out of an 85,000 square foot office in Beaverton but later moved to a 166,000 square foot facility in Wilsonville, Oregon.

After experiencing great success throughout the country, Hollywood Video Rental could no longer be ignored by the top U.S. rental company, Blockbuster Video. In 2004, Blockbuster announced they were planning a hostile takeover of Hollywood Video. Hollywood Video Rental seemed doomed, but at the last minute, in January 2005, they organized a buyout by a smaller competitor, Movie Gallery, Inc. This buyout kept Blockbuster from gaining a controlling interest in the company while ensuring that Hollywood Video Rental would keep its identity, headquarters, and all of their corporate employees.

Movie Gallery, Inc., now the owners of Hollywood Video Rental, was founded in 1985 out of Dothan, Alabama. Movie Gallery secured their position in the industry by establishing locations in rural America, so they could steal a large portion of Blockbuster’s customers who would have to drive into the city for their video rentals. With the acquisition of Hollywood Video, they had the power and urban locations to directly compete with Blockbuster. In 2008, Movie Gallery moved their corporate offices into the Hollywood Video Rental offices in Wilsonville. At the time, they had over 4,700 stores.

Alas, Movie Gallery and Hollywood Video Rentals found that they could no longer maintain a profit in the new video rental environment. Consumers had begun dropping the traditional video rental stores for newer video rental companies that could provide more convenience and/or a larger movie selection.

There are three new types of video rental stores that sealed the fate of Hollywood Video Rentals: Mail-order/online rentals, unmanned rental kiosk machines, and streaming Internet rentals.

Netflix is the original company for online/mail-order rentals whose success marked the downfall of the traditional rental stores, such as Hollywood Video Rentals. Their new business model allows customers unlimited rentals for a low monthly subscription. Rentals are delivered through the mail in 2-3 days after ordering them, and they come with prepaid return envelopes. Customers can begin a queue of rentals they wish to receive, and upon return of their current rentals, the new ones are sent automatically. Blockbuster tried to compete by copying this business model, but after a few years, they too, found they could not outdo Netflix.

The next type of new rental company to contribute to the downfall of Hollywood Video Rentals and other traditional rental stores is the automated kiosk. Redbox kiosks began popping up in grocery stores, convenience stores, and drug stores throughout cities and quickly became a success. They allow movie rentals by anyone with a credit card. Movies are efficient stored in the machine and delivered through slots. They are returned to the machines by customers, and their cards are automatically charged for extra days or non-returns.

The final type of new rental company works entirely online. Many new TVs and TV appliances, such as video game consoles, DVD players, and Tivo/DVR machines can be directly connected to a high-speed internet connection. Netflix and Amazon, and Apple iTunes, among other companies, can now provide fully digital movie rentals with no discs or cassettes to exchange. Customers order movies online and they are delivered directly to the customer’s computer or A/V equipment. Most of these rentals are time limited, allowing multiple views within a given timeframe.

Because so many customers turned to these new types of stores, Hollywood Video Rentals closed quietly and were missed by few.

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