Hollywood Video will close four of 10 Las Vegas stores as company restructures

Mike Fegan bought "Final Destination" and "Saw VI" at Hollywood Video for $9.49 each, but was more concerned about the young woman behind the counter losing her job than he was about close-out deals on DVDs.

He also wanted to know the location of the nearest Hollywood Video after his neighborhood store at Buffalo Drive and Flamingo Road shuts its doors, part of the parent company's Chapter 11 bankruptcy restructuring plan announced in February.

It's going to be a little drive, either north to the store at Charleston Boulevard and Hualapai Way or south to Durango Drive and Warm Springs Road.

"This is the most convenient location," Fegan said Wednesday during one of his weekly visits to Hollywood Video with his teenage daughter. "They had to be making money hand-over-fist. I know when a business is making it and when it's not. How many people are losing their jobs?"

Hollywood Video is closing four of its 10 stores in Las Vegas at 4001 S. Buffalo Dr.; 2875 S. Nellis Blvd.; 5570 Camino Al Norte; and 75 S. Valle Verde Dr. They're having liquidation sales of DVDs, video games and other products through March and probably into April, one employee said.

Premiere movie releases are going for $9.49. Westerns, dramas, classics, family and foreign DVDs are three for $15. PlayStation and Wii games are marked 40 percent off. Storage shelves are priced at $40 per four-foot section. Everything must go, the sign says.

In its Chapter 11 filing, Wilsonville, Ore.-based Movie Gallery Inc. cited economic and competitive realities facing its business model.

Video rental stores in general are struggling as consumers cut back on spending, even on movies at home. Blockbuster Video, the largest video rental chain in the nation, restructured its debt last year to narrowly avoid bankruptcy.

They're competing with pay-per-view cable and Internet operators such as Netflix that allow customers to stream as many movies as they want for a flat monthly fee or receive them by mail. The $1-a-night Redbox kiosks are expanding their presence, from 7-Eleven stores to McDonalds.

In 2007, 73 percent of spending on movie rentals occurred at brick-and-mortar stores, according to Adams Media Research. That figure is expected to drop to 59 percent this year, with mail-order services claiming 32 percent of the market. Overall revenue from video rentals has been flat at about $7.6 billion for the past two years, the research firm reported.

Movie Gallery expects to close about 760 stores during bankruptcy reorganization. It will operate more than 1,100 Movie Gallery, 545 Hollywood Video and 250 Game Crazy store locations.

Calls to Movie Gallery were answered by an automated messaging system that said the company was not responding to media inquiries. Information on store closings and restructuring is posted on the company's Web site at www.hollywoodvideo.com.

It's the second trip through bankruptcy for Movie Gallery after acquiring rival Hollywood Entertainment for $850 million in 2005, including $350 million in debt.

"Over the past two years, Movie Gallery took a number of steps to respond to its business challenges and position the company for future success, including closing several hundred underperforming stores across the country," the company stated. "However, these actions were not sufficient."

Despite shutting down unprofitable store locations, Movie Gallery continued to take significant losses in 2009 as annual revenue fell $546.3 million, or 28 percent, to $1.4 billion.

Customer Sara Nelson said the closures don't affect her. She gets her movies at Sam's Club and Wal-Mart and had only gone to Hollywood Video for the liquidation sale.

"I stopped renting years ago when they started home entertainment," Nelson said. "Even when these stores are in business, why rent it over and over when you can buy it once and keep it forever?"

Andrew Sevilla, shift manager at Mark's Video on Silverado Ranch Boulevard, a former Hollywood Video store, said some customers still prefer the "human side" of video rental. Like Redbox, Mark's Video also has 99-cent rentals and offers a wider, up-to-date selection of titles, he said.

"People who deal with us like having a real person to help them," Sevilla said. "With Redbox, if there's an error or something happens with the machine, there's nothing you can do."

Contact reporter Hubble Smith at hsmith@reviewjournal.com or 702-383-0491.