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Change or Die: The Movie Gallery Story

6 May, 2010 By: Thomas K. Arnold

The end came suddenly and swiftly, an affirmation of the old saying, "Change or die."

By steadfastly refusing to do the former, it was inevitable that Movie Gallery’s fate was sealed. And now the ailing rental chain has taken itself off life support and announced it will close all remaining Movie Gallery and Hollywood Video stores within the next two months.

I’ve written previously, and at great length, about all the things Movie Gallery did wrong over the last decade, about how it stubbornly clung to its in-store rental model even as the winds of change blew all over the home entertainment business. First came the subjugation of videocassette rental by DVD sellthrough; then came the revolution in the rental end of the business that saw mail-order subscriptions (Netflix) and, later, ubiquitous kiosks (Redbox) siphon an increasingly large percentage of consumers out of brick-and-mortar rental stores.

Blockbuster also was hit hard by this one-two punch, and yet that chain at least tried to survive by toying with subscription rentals and kiosks on its own. Movie Gallery did nothing, and when it became clear that the old rental model was in trouble, what did the brain trust that ran this chain do? Why, they bought another ailing rental chain, Hollywood Entertainment Corp., that was likewise stuck in the 1990s.

As a coda to Movie Gallery’s announcement last weekend that it would soon close up shop completely, the chain yesterday in a regulatory filing reported a net loss of more than $70 million just for the one-month period between March 8 and April 4.

I am genuinely sorry for the thousands of Movie Gallery employees who are losing their jobs because of management’s stupidity. I can only hope that at least some of them will find work among the ranks of the surviving independent video rental stores, scrappy fighters that have somehow been able to carve out a niche for themselves in a way a lumbering national chain never could.

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