Between Sony Pictures laying off another 450 employees in March and Movie Gallery filing for Chapter 11 again, one would find it hard to believe the entertainment industry just came off one of their biggest years ever. But technology, maybe more so than the economy, seems to be the major impetus behind this latest round of layoffs and closures. It would appear if one fails the other may soon follow?
Sony Pictures, despite making headlines with 18 Oscar nods this week, is cutting 450 jobs in March (or 6.5% of its 6,800 person workforce). This comes one year to date after they let go of 250 employees. According to Sony Co-Chair Amy Pascal, their industry has been affected by the economy (obviously) but also technology. With DVD-buying habits changing so much over the last two years due to outlets like Netflix and Redbox offering cheap rentals, the channel considered the last chance to make a profit on films that underperform at the box office is quickly drying up. And since the rule of thumb is 75% of films underperform, that leaves a pretty significant gap to eclipse with DVD sales and rentals… which brings us to the next group.
Movie Gallery is filing for Chapter 11 Bankruptcy for the second time since 2007. They have been hit hard during the recession, but have also struggled to stay above water since other, less expensive alternatives, ie Netflix and Redbox, entered the home movie market.
Underwater by as much as $540 million since they acquired Hollywood Entertainment Corp for $800 million back in 2005, Movie Gallery first filed Chapter 11 in October 2007. At that time they operated 4,430 stores. When they emerged from bankruptcy in May 2008, 3,300 stores were still in operation. Since then, they have closed an additional 700 stores and have only 2,600 left open for business.
Movie Gallery employs about 19,000 people and reported $1.8 billion in annual revenues for 2009, down from $2 billion in 2008. They plan to cancel 856 store leases, most of them Hollywood Video stores. The average size of a Hollywood Video store is between 5,000 to 7,000 SF . This is a large foot print for a retail store of this nature. Blockbuster already started shrinking the average size of their stores in an effort to cut costs (after closing another 960 stores in September 2009).
California is leading the list for Movie Gallery/Hollywood Video store closures followed by Texas. The stores closing in Oregon are below:
- 8001 SE Powell Blvd, Suite O – Portland
- 3610 Center St NE – Salem
- 17401 SE McLoughlin Blvd – Milwaukie
- 11875 SW Beaverton Hillsdale Hwy – Beaverton
- 825 W 7th Ave – Eugene
- 3411 Commercial St – Salem
- 2770 Gateway St – Springfield
- 11198 SW Barnes Rd – Portland
- 1328 SW Baseline Rd – Hillsboro
- 3030 NE Weidler St – Portland
- 1580 Mount Hood Ave, Suite B – Woodburn
- 8112 SE 13th Ave – Portland
- 1117 NE Broadway – Portland
- 3557 SE Hawthorne – Portland
- 14718 SE Sunnyside Rd – Clackamas
- 7275 SW Dartmouth – Tigard
source: CoStar
