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The Wall Street Journal is reporting the immediate death of Movie Gallery and its subsidiaries Hollywood Video and Game Crazy. The once #2 rental company will close the balance of its 2,415 stores in the coming few months.

Over the next 4-8 weeks, the stores will go into liquidation mode, selling off all of their assets at firesale prices. This may be a good time to pick up some movies and games at bargain prices. My local Hollywood Video has been having their closing down sale for the past few weeks, but I have not been in to check it out.

Has anyone else been to a local store’s liquidation sale? If not, will you go and see if there are some bargains to be had?


While the closing of stores like these may be inevitable, it is a sad day and makes me think of the many people directly affected by the death of a company. With over 19,000 employees, there are soon to be a lot more people looking for work. Hopefully they can all find jobs soon and keep food on the table for their families.

What does all of this mean for the industry? Will this strengthen Blockbuster enough to keep them around even longer? Will it have a positive effect on Redbox and Netflix? I personally hadn’t rented from a Movie Gallery store for many years, so it will not affect me in any meaningful way.

And finally, if ALL video stores across the country closed at the same time, how would YOU be affected?

42 Responses to “Movie Gallery / Hollywood Video / Game Crazy Is Down for the Count”

  1. Visitor [Join Now]
    will [visitor]

    Blockbuster has a shot if it can rationalize its store portfolio and dump its unsuccessful Movielink and Total Access ventures. Sure, Netflix and Redbox remain strong competitors even with BBI’s 28-day rental window advantage, but Family Video has shown it is still possible to be a successful pure-play bricks and mortar rental venue. Going forward, Blockbuster has to decide what it is best at and stick to it. The wild card is Blockbuster Express; is the licensing income from NCR worth the cannibalization of its core B&M business? On balance, I’d say yes; it’s not like Redbox is going away…

  2. Visitor [Join Now]
    John Small [visitor]

    Movie Gallery was crazy to have taken on Hollywood’s debt. They were a good and profitable company before that boneheaded move. They sealed their fate when they bought their rival.

    On the bright side for Redbox lovers, there are a lot of small towns needing Redboxes now. Estimated $750 million in rental revenue up for grabs now.

    • Visitor [Join Now]
      TrickyM [visitor]

      Looking at the bright side? Hey I think you are growing as a person and I will applaud that. I also agree with your place in this topic. Hollywood Video was doomed from early on. In fact more often than not I would go in simply to visit Game Crazy as they did have many games for older consoles that are not so easy to find.

      • Visitor [Join Now]
        John Small [visitor]

        Same guy as always speaking the truth as always.

        • Visitor [Join Now]
          Firstlawofnature [visitor]

          Not when it comes to coinstar’s Q1 financials.

          • Visitor [Join Now]
            John Small [visitor]

            So how many shares of Coinstar do you own FLON?

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            Where do you work? I wouldn’t answer that if I were you.

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            Apologize for swinging over here to finish the topic.

            You said the following…

            ‘Profit per machine looks like it is falling or is below zero already.’

            ‘If you look at the profit and assume none of it came from their other operations then the profit / machine is still falling.’

            ‘In fact, it is quite likely that their per machine profit was almost zero for the quarter.’

            ‘the fact that they are not profitable or barely profitable should be of concern to their investors.’

            ‘The quarter was not a bad quarter growth wise but there are still plenty of questions whether the machines are actually profitable at all.’

            In order for profit per machine to be down operating income after depreciation for redbox would have to be down and it wasn’t. By definition you are wrong unless coinstar publishes fraudulent numbers. Profit per machine can’t be below zero if redbox’s operating income after depreciation is a positive number, which it is. You are dead wrong and should be arguing instead about how much business redbox is going to lose with the delays going forward.

            Depreciation is covered on page 68 of coinstar’s 10K. Since redbox has little in the way of back catalog and turns over new releases rapidly the amortization of DVD costs is essentially a cash expense. There aren’t enough slots in a redbox to keep movies around and depreciate them over multiple years. This is different from both netflix and blockbuster that may amortize over much longer periods of time. Non-issue.

            You still won’t answer if you were taking income from continuing operations and dividing by average number of kiosks to come up with your assertion that profits per kiosk was lower. This is exactly what you did right?

          • Visitor [Join Now]
            John Small [visitor]

            I am retired and no longer work. I made my money off of my extensive collection of Silver Age comic books and sit quietly by the seaside sipping Chianti and surfing the internet.

            Profit per machine is falling. Newly installed machines are not growing as quickly due to saturation.

            Now how many shares of Coinstar do you have Mr. P&D?

          • Visitor [Join Now]
            TrickyM [visitor]

            Chianti, wasn’t that a favorite of Hannibal Lecter? I don’t feel safe on this site anymore……

          • Visitor [Join Now]
            John Small [visitor]

            I do have a predilection for red meat but prefer the less human varietals. Now if you have some fava beans well….

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            You have no idea what you are talking about on this subject. What you are saying is not mathematically possible. That’s even before considering the new units being added everyday that drag down the average. And you are still not answering the main question about how you calculated your numbers – income from continuing after interest & one time charges right? A truth teller you are not.

            And yeah I’m a real big pump and dump and you always tell the truth. Unless I can get you to buy shares I guess I’m not doing a great job of pumping am I.

          • Visitor [Join Now]
            TrickyM [visitor]

            My response was my way of saying that you shouldn’t expect me to be serious all the time, as I am a real person.

            My heart goes out to the people needing jobs from this situation.

          • Visitor [Join Now]
            John Small [visitor]

            I hear you Tricky. Same applies here.

            Oh it is possible FLON. P&D’rs don’t need everyone to buy, just enough so they can dump before the crash.

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            ‘In fact, it is quite likely that their per machine profit was almost zero for the quarter.’

            You made a statement and you won’t support it because it is wrong. You won’t admit that you used income from continuing after interest & one time charges to make your claim.

            Does that sound to you like ‘…speaking the truth as always.’?

          • Visitor [Join Now]
            John Small [visitor]

            What is there to support?

            The numbers are clear.

            Their per machine profit is nearly zero for the quarter.

            That is an undeniable fact.

            You know it but you don’t want to admit it in case the share price drops and you lose money.

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            And you divided what number by what number to arrive at that? All you have do now is fill in the blanks.

          • Visitor [Join Now]
            John Small [visitor]

            Basic math beyond you Flon?

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            You are really dragging this out.

            So for Q1 2010 you took $6,442,000 and divided by 23,600 units for $273 of profits per kiosk. For the prior year you took $7,309,000 and divided by 14,550 units for $502 of profits per kiosk. This is what you did correct?

          • Visitor [Join Now]
            John Small [visitor]

            Well, I suppose you could do it that way but I’m not sure you would get a very accurate number. It sort of disregards the rest of Coinstar’s operations, the rate of maturity on previously existing kiosks, expected rate of return on kiosks under 18 months old and all that.

            However, you would get the same general result which is the the profit per kiosk is dropping. This is likely a result of the increased COGS from the workaround. It really should not be surprising.

            The good news, FLON, is that the 28 day window is now in place and we can see how that works over the next couple of quarters. And if Redbox is actually raising their price, even by only 15 cents, that can only bode well for their future numbers. I’d prefer to see them at $2.00 for NR and then drop to $1.00 after 28 days but that may take a while for them to figure out.

            See FLON, I’m not saying Redbox is going out of business. I just don’t see sunshine and rainbows everywhere like you do. But then again, I don’t own any shares in the company so why would I?

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            Are you really going to try and slither your way out of this? You made a clear claim of almost zero profits per kiosk. I just want you to simply share the numbers that you used to make this determination.

          • Visitor [Join Now]
            John Small [visitor]

            It’s not slithering FLON. It’s just the way the numbers work out.

            As long as Coinstar is not playing games with their YOY deprec. calcs, you are correct that they are making a profit on a per machine basis. That profit has fallen from last year. You know this. You don’t want to admit it but you do.

            How does that affect where Coinstar is going? Well, I certainly suspect it had something to do with their signing those 28 day window agreements. I mean, it isn’t like I told you they were going to have to do that right? You certainly did not think so but they did. The numbers forced them to do it.

            The good news for you, as an investor, is that this pretty much wipes the slate clean for comparables. With any luck, Coinstar will see their numbers rise again.

            I really would prefer to see them get their machines to the point where a power outage for half a day would not make the machine lose money for an entire month. This incredibly low margin game they are playing will be suicide over the long term.

  3. Visitor [Join Now]
    Firstlawofnature [visitor]

    Gotta love that picture. One red glove for flix and one red glove for redbox. Innovation alive and well into the vid distribution business.

    • Administrator
      Michael [administrator]

      Nice catch on the gloves – I wasn’t sure if anyone would notice that. :)

      I thought it was an interesting metaphor for what is happening right now in the industry… Will we see a blue glove strike a knockout blow anytime soon?

      • Member [Join Now]
        alans613

        Maybe at the kiosk level with their currently expanding BB Express Kiosks. Unless they lower their $5 a night prices at the B&M level they will be the next Titanic to hit the iceberg.

  4. Visitor [Join Now]
    tuna [visitor]

    I used to rent movies there at Movie Gallery for $1.76 per night then it was close all of a sudden now our last two Hollywood video will close soon , I stop going to Hollywood video two years ago because of $5 for five nights and a $1 credit if you bring it back the next day, RIP in peace Hollywood Video

  5. Visitor [Join Now]
    EM [visitor]

    The thing I miss when I had a local Hollywood Video was the MVP plan….there was no better deal than 15 bucks a month for unlimited movies 3 out at a time. There is still no better deal than that anywhere unless your local library has enough of a selection, which is unlikely, but it would be free.

  6. Visitor [Join Now]
    mh [visitor]

    I went to our Hollywood video when it was closing a month ago. I was there on the late end (after several weeks) There was still a massive number of DVDs (with only 1 week to go) Our DVDs (including brand new releases) were $3 each.

    PS a local thrift store seemed to either buy or be donated the left-overs from a different Hollywood Video store. Good deals to be had there too!

  7. Visitor [Join Now]
    Marge [visitor]

    Hollywood video has been selling DVDs cheap for a while now, I don’t know that they’ve got anything worth it left. I bought online a dozen disks about $2 each a couple of months ago.

  8. Member [Join Now]
    starman15317

    My local Movie Gallery and Hollywood Video are closing, but I didn’t go in. They kinda scare me.

  9. Visitor [Join Now]
    joe d. [visitor]

    While I was visiting family in Texas, we went to see if there were any good cheap games to be had. Nope. The game were bad, and the prices were outrageous.

  10. Visitor [Join Now]
    rb [visitor]

    “They kinda scare me”….You’re funny starman….maybe just thinking about the high rental prices they charged still brings up ‘scary’ memories for you! :-)

  11. Member [Join Now]
    ChadCronin [chadcronin]

    This what I said when I first read about this on Blu-ray.com – I used to enjoy going to Blockbuster. I had fun walking around the New Release wall and seeing the the stores were well kept usually. I liked seeing what peole were looking at. I had fun talking about the movies with the workers. I just didn’t like that more things were becoming Blockbuster exclusive and the quality of those were getting lower and lower. I also was offended they dictated which content was removed from titles, like the R-rated Showgirls. I also didn’t like the location of their stores and often wasted way too much gas getting there which didn’t make it cost effective. I also noticed their discs were kept in poor quality, once I had to drive across town 2 times to get a different copy. I definitely think the cost per title is very expensive and when I did sign up at all the last few years it was for either the 1 or 2 out at a time montly rental, but always just did it for one month then waited a long time to let titles build up. Now with Redbox being much more cost effective in regards to location and cost per title, it is what I really like. Once they start carrying more new titles and Blu-ray, it will be the best. Netflix is ok, but i hate waiting and got tired of cracked discs. Will only care about streaming once it’s on the qualiity level of Blu-ray.

  12. Member [Join Now]
    starman15317

    I honestly will miss Hollywood Video though. I had some good memories with that store (then again I had some good memories of going to Blockbuster as a young kid and look how that place has become). Other than Hollywood Video’s prices being so high, they were pretty decent. I’m not a big fan of Movie Gallery though. They have a terrible selection of movies. I’ve never been to a Gamecrazy since there aren’t any near me.

    • Visitor [Join Now]
      TrickyM [visitor]

      I wonder how much profit they lost (Hollywood Video) making people dress up in those ridiculous usher outfits. I still laugh about that. I think it was considered cool for 2 weeks then……..lame.

  13. Visitor [Join Now]
    Micgold [visitor]

    I used to like Hollywood Video until they went and changed their rental programs last year. Wanted to charge more, give me less, and make me keep up with some kind of boneheaded points thing! (like I have time for that!!??)After about 10 loyal years, I left and went to Netflix. I’m not suprised by this, but saddened.

  14. Visitor [Join Now]
    Bobbie [visitor]

    Movie Gallery was started in 1978 and was designed to service the video needs of rural areas. I ran a store for 6 years, but when we acquired Hollywood video, the company became stupid. In the spring of 2009, most of the original Movie Gallery execs bailed. There must have been some real small print in the contract to purchase Hollywood, because suddenly their execs were calling all the shots. They started raising prices instead of becoming competitive. They started requiring bank cards to open an account. In small towns this just doesn’t fly. They blamed their store managers and employees for their downfall because they couldn’t sale monthly rental programs at 43.00 a month compared to Next Flix at 8.99. I think local rental stores could make a go of it if they carried a large number of new releases, but didn’t charge 5.00 for them. I think the general public still likes to go down the street at the spur of the moment and get a movie for the night. I don’t have much sympathy for Movie Gallery. They bailed out Hollywood video and then let them run the company, when obviously they didn’t know what they were doing in the first place. I rent at my local RedBox and have even started buying my movies there. But if the prices keep going up, I won’t drive anywhere. I’ll just order it on pay-per-view, which I believe will probably keep going down in price.

  15. Visitor [Join Now]
    Movie Gal [visitor]

    It’s a shame that the whole entire company is folding, however, not surprising. I currently work part time at the local Hollywood Video, and we are liquadating our store, and it’s not shocking, the business there was very slow. This is one of the absolute worst companies I have ever worked for, the upper management was awful with no real business sense and no real sense of urgency, which the results of these behaviors can now clearly be seen by the financial status of the company. I feel very bad for all of those losing their jobs and wish them all the very best of luck.

  16. Visitor [Join Now]
    shopping time [visitor]

    I believe it was by George Redding, do you know them?

  17. Member [Join Now]
    alans613

    We had a Hollywood Video here locally that closed down four or five years ago. I always liked them. I was sad to see them go. I’m sure the BB across the street picked up some of their former customers until RB came along. Now that very BB across the street is only one of two b&m video stores left in town, the other being Family Video, who once had THREE locations, and are now down to one.