May 11, 2010

Closing credits to roll for Hollywood Video

Hollywood Video plans to close its stores nationwide, including three in the Roanoke and New River valleys. Personnel at the chain's Roanoke area locations are telling customers that stores will close next month, with liquidations imminent.

Closing credits to roll for Hollywood Video -

Movie Gallery, the parent company of Hollywood Video, plans to shutter its stores and liquidate its assets, according to a filing last week in the U.S. Bankruptcy Court of the Eastern District of Virginia in Richmond, stating that the company defaulted on a loan.

Movie Gallery did not respond to media inquiries Monday.

The closings come after the Oregon-based chain filed for Chapter 11 bankruptcy in February. Movie Gallery owns stores under the brands Game Crazy, Hollywood Video and Movie Gallery.

The challenges of a competitive movie rental field are mounting for Movie Gallery and other rental chains. The rise of $1-a-day DVD kiosks and the success of the mail-order company Netflix are the industry's major competitors, said Jan Saxton, vice president and senior film analyst at Adams Media Research in California.

Nationally, the number of video rental stores peaked at 70,000 in 1989, while in 2003, DVD rental retailers totaled 27,000, Saxton said. His firm's 2009 research reveals a meager 14,000 movie rental stores nationwide.

Ahead of Hollywood Video, all Blockbuster stores in the Roanoke and New River valleys closed several months ago, after the franchise owner of these outlets filed for bankruptcy.

Still, a regional movie rental chain remains. Movie Starz Video, headquartered on Mountain Avenue in Southwest Roanoke, has 30 stores in Virginia, Tennessee and West Virginia. Recently, the company began offering 99-cent rentals, per day, for newer movies. It is a direct response to the proliferation of $1 rental kiosks, said Mark Tozier, president of Movie Starz.

The company also is eyeing soon-to-close Hollywood Video and Movie Gallery locations for new stores, Tozier said.

"Our biggest challenge is getting people to understand there is a difference between a full service video store and a kiosk, and it's not just the price ... it's about one-on-one service," he said.

It's not a secret that DVD rental kiosks are sprouting rapidly in the Roanoke and New River valleys. Blockbuster Express kiosks, Blockbuster's version of $1-a-day DVD rentals, landed in at least seven Sheetz and other convenience stores.

Redbox, another $1 kiosk rental concept, has 29 red machines at Kroger, Walgreens, Walmart, Food Lion and 7-Eleven stores.

Also, Netflix maintains a quiet presence in the Roanoke Valley, where it opened a distribution center in 2008. It is one of the company's 58 distribution centers nationwide, but Netflix spokesman, Steve Swasey, would not disclose its exact location.

News researcher Belinda Harris contributed to this report.

Posted by staff at May 11, 2010 08:56 AM