Movie Gallery

The first Movie Gallery store opened on December 11, 1984 in Union Park, Florida, in the Orlando-Kissimmee metropolitan area. It was an outcropping of National Home Video, a Kissimmee-based enterprise founded a year prior by 19-year-old Jerry D. Turner. Due to its generic name and causing potential confusion with National Video, all stores would be converted to the Movie Gallery name by the end of 1985. By June 1987, the company owned five stores and had 45 franchise locations. In 1988, Movie Gallery began consolidating franchisees into company‑owned stores. By 1992, the company operated 37 stores and reported approximately $6 million in annual revenue.

M.G.A. Inc. (Movie Gallery of Alabama) was the first out-of-state franchisee, founded by Joe Malugen and Harrison Parrish in Dothan, Alabama. They would open the first location outside of Florida on Ross Clark Circle in Dothan in February 1985. After National Home Video, Inc. began to experience financial difficulty in the early 1990s, M.G.A. would acquire the Movie Gallery name and assets in September 1992, moving the chain's headquarters to Dothan.

In August 1994, the company completed an initial public offering of its stock. With the proceeds from this offering, the company began to quickly complete acquisitions of various video chains, primarily in the southeast. In early 1995, the company raised additional public funds and continued the acquisition and development of stores. By the middle of 1996, only 22 months after beginning its aggressive expansion strategy, Movie Gallery had grown to over 850 stores through over 100 separate acquisitions.

In 1999, Movie Gallery announced plans to build 100 new stores. The company completed an 88-store acquisition of Blowout Entertainment in May and ended the year with more than 950 locations in 31 states. In 2000, Movie Gallery again set its goal at opening 100 new stores and relocating 25. This goal was surpassed.

The company moved forward with its largest single-chain acquisition to date, expanding its base of stores by 30%, in late December 2001. The addition of Video Update stores to the Movie Gallery family launched the company's international presence with 100 retail locations in Canada. From 2001 to 2002, the number of Movie Gallery stores has increased by 49 percent, or 510 locations, most of which were acquired through the purchase of Video Update. Movie Gallery achieved the 1,678 store mark in 2002.

In 2005, the company completed the largest acquisition to date with the Hollywood Entertainment merger. This combination of companies increased the store total to 4,700 with revenues in excess of $2.5 billion. In addition, Movie Gallery opened 61 new stores in Western Canada with the acquisition of VHQ Entertainment.

Downfall

The company began having financial difficulties and announced the closure of 520 stores in September 2007. At the time Movie Gallery had about 4,500 locations. The next month, the company filed for Chapter 11 bankruptcy protection under the U.S. Bankruptcy Code. Because of these troubles, the stock price dropped below $1 (~$2.00 in 2025) per share and was removed from listing on the NASDAQ stock exchange in November 2007.

An additional 400 stores were scheduled to close announced in February 2008, followed by another 160 stores were scheduled to close announced in April 2008 during the bankruptcy reorganization. Movie Gallery emerged from Chapter 11 in May 2008 and appointed C. J. Gabriel, Jr. as the new chief executive officer. Founder and former CEO Joe Malugen continued to serve on the Movie Gallery Board of Directors until leaving on July 30, 2008. The company relocated its headquarters to Wilsonville, Oregon (home of the Hollywood Video subsidiary), in late 2008. In January 2009, they closed their Wilsonville distribution center.

MovieBeam

MovieBeam was a set-top service offered in larger cities in which customers could download movies to a set-top box. Most movies expired within 24 hours of downloading. The company was founded by Disney and other investors as an alternative to online movie downloads. A special set-top box had to be purchased by consumers for the service at a retail price of $149.95. Most major movie studios provided new release content to the service. However, MovieBeam failed to gain any serious traction in the marketplace. MovieBeam was shut down on December 15, 2007. As of June 2008 the remnants of MovieBeam, including its trademarks and other intellectual properties, were sold to an outside investors group for approximately $2 million (~$2.85 million in 2024) as part of the company's restructuring. All in-store kiosks for the service were then removed as well.

Hollywood Video

Hollywood Video, a subsidiary of Movie Gallery, Inc., operated from Wilsonville, Oregon, as a DVD and video game rental shop chain in the United States. It was started in 1988 by former CEO Mark Wattles and his wife. The chain was the largest direct competitor of Blockbuster Video until it was purchased by Movie Gallery in 2005. Hollywood Video declared bankruptcy in February 2010 and announced that it would shut down three months later.

Purchase of Hollywood Video

Hollywood Video was the target of a hostile takeover attempt, initially announced at the end of December 2004 by competitor Blockbuster Video. In February 2005, Blockbuster announced an exchange offer of $14.50 (~$22.00 in 2024) per share ($11.50 cash and $3.00 in Blockbuster shares).

In order to create a stronger position against the hostile takeover, Hollywood Video agreed to a buyout on Monday, January 10, 2005, by its smaller competitor Movie Gallery. Movie Gallery paid $860 million, $13.25 per share, and the assumption of $380 million in debt. Stocks closed at $13.85 on January 10 after the news. Blockbuster then dropped its purchase plans, citing anti-trust concerns. Movie Gallery completed its purchase of Hollywood Video on April 27, 2005.