OUTCOME OF THE IT HAPPENS AT THE HILTON CAMPAIGN

The ‘‘Welcome to Hollywood’’ campaign was well received and resulted in numerous honors. Not only did the campaign garner several awards at the 40th annual Clio Awards Festival but the radio portion of the campaign received a gold award at the One Show, and several of the spots were recognized at the national Addy Awards. ‘‘Action’’ was named on Adweek’s ‘‘Best Spots of the Year—1998’’ list, and the campaign took honors at the 46th International Advertising Festival in Cannes, France. Cliff Freeman was selected as the Agency of the Year by both the Clio Awards and SHOOT. Hollywood Entertainment managed to open about one store per day in 1998, and by mid-1999 there were more than 1,300 Hollywood Video stores in 43 states;
Hollywood Video’s market share was about 10 percent. For the quarter ended September 30, 1998, Hollywood reported revenue of $184.1 million, a 48 percent increase from the same period in 1997. Same-store sales enjoyed an increase of 7 percent. For the first quarter of 1999 the company reported revenue of $260 million, up 53 percent from the same period in 1998. Same-store sales jumped by 18 percent, and net income climbed 92 percent. In October 1998 Hollywood purchased
Reel.com, Inc., a leading Web-based video retailer, thus expanding its distribution channels. As the company’s Web site indicated: ‘‘The past success of Hollywood Video is apparent and the future is bright. If the Hollywood Video story were a movie, the final frame of this action packed adventure would not read ‘The End,’ but rather ‘To Be Continued . . . ’ ’’

MARKETING STRATEGYWELCOME TO HOLLYWOOD" CAMPAIGN

By the time Hollywood Video launched its ‘‘Welcome to Hollywood’’ campaign in mid-1998 the company had a strong first quarter under its belt—it had opened 88 new stores and reported revenue of $170 million, a 54 percent jump from the first quarter of 1997. The company also launched a new store design that emulated the allure of Hollywood to a greater degree—the bright lights and monitors were accompanied by Hollywood memorabilia and photos of movie stars. The campaign’s ads appeared in major U.S. markets and spotlighted Hollywood Video’s new releases, promotions, guarantee policies, and, as Wattles said in the Portland Oregonian, ‘‘that we love movies. . . . We are Hollywood.’’ Arthur Bijur, Cliff Freeman’s executive creative director, explained in SHOOT that the campaign was designed to show consumers that Hollywood Video ‘‘really gets Hollywood and everything about it, . . . to show that it’s more a place which is really all about movies.’’ To accomplish this, Bijur said, the spots focused on things that were uniquely and utterly Hollywood.
‘‘Action’’ was set in the action/adventure section of a Hollywood Video store. An older cowboy dressed in black attempted to teach two male employees how to throw a fake punch as customers looked on in curiosity. The employee practicing to hit ran into some trouble with the maneuver. The cowboy explained, ‘‘That was a good start, but we don’t actually want to hit the person.’’ The puncher tried again but was unsuccessful. On the third punch the second employee slumped to the ground as the cowboy exclaimed, ‘‘That was so close!’’ Another television spot, ‘‘Don,’’ lampooned movie trailers and featured Don LaFontaine, who actually provided voiceovers for many trailers. In the ad a couple approached the counter with a video and asked the employee to tell them a bit about the movie. The employee knocked on a cabinet underneath the counter and LaFontaine, dressed in a suit, emerged. The employee handed him the tape, and LaFontaine read in his instantly recognizable voice:
‘‘From Flesh to Steel. From Blood to Blade. From Man to Mutant. Evil has a new enemy. Justice has a new weapon. And the world . . . has a new hero.’’ LaFontaine then handed the tape back to the employee and crawled back into the cabinet. Cliff Freeman art director Matt Vescovo explained in SHOOT that ‘‘the whole idea is that Hollywood Video is totally Hollywood, and one of the things we associate with Hollywood is this guy’s voice. So what better guy is there to describe a movie to customers than this guy who’s an authority and knows everything about every movie and everybody has heard his voice a million times?’’ Other spots included ‘‘Birds,’’ which parodied Alfred Hitchcock’s movie of the same name, ‘‘Musical,’’ which featured two male employees dancing and singing about the store’s five-day rental policy, and ‘‘Credits,’’ which spoofed the final credits of a movie. The ‘‘Welcome to Hollywood’’ campaign also included several radio spots. All followed the ‘‘Sixty Second Theater’’ theme and provided a humorous glimpse into the plots of such popular movies as Tomorrow Never Dies, As Good As It Gets, Scream 2, and Good Will Hunting. In the ads the announcer began, ‘‘Hollywood Video presents Sixty Second Theater, where we try, unsuccessfully, to pack all the action and drama of a two-hour Hollywood production into 60 seconds.’’ A comical take-off of the plot ensued, complete with actors impersonating the celebrity voices. The Good Will Hunting spot ended with the announcer stating, ‘‘If this doesn’t satisfy your urge to see Good Will Hunting, and we can’t say we blame you, then rent it today at Hollywood Video, where Good Will Hunting is guaranteed to be in stock, or next time it’s free.’’

COMPETITION OF THE "WELCOME TO HOLLYWOOD" CAMPAIGN

Generating three times as much revenue as the theatre arena, the home video market was extremely lucrative and, as a result, highly competitive. Number-one ranked Blockbuster Inc. (previously Blockbuster Entertainment Corp.), which was three times the size of Hollywood Video, had dominated the field for a decade and at the end of 1997 boasted 4,000 stores in the United States and 6,000 globally. Purchased by entertainment giant Viacom Inc. in 1994, Blockbuster enjoyed a commanding market share of 25 percent at the beginning of 1998. Hollywood, though expanding rapidly, had just fewer than 1,000 stores by Christmas 1997 and a market share of about 5 percent, according to the Portland Oregonian. Blockbuster was not invincible, however, and the company struggled in 1996 and 1997 as a result of financial and marketing blunders. Hollywood Video, meanwhile, enjoyed rapid expansion and healthy profits. Though media reports made much of the competition between Blockbuster and Hollywood, Wattles maintained that he did not view Blockbuster as a rival or an enemy. ‘‘[W]hile Blockbuster is certainly the Goliath, I would not describe us as the David at all. We are not out to slay Goliath,’’ Wattles said in the Wall Street Transcript in 1994. He referred to Blockbuster as ‘‘our friendly competitor’’ and insisted there was room in the market for both superstore chains. Still, the two appeared to be rivals—Hollywood claimed to have the largest number of titles, offered guaranteed availability of popular releases, and had aggressive pricing and rental strategies. Blockbuster, with a new CEO and renewed focus on video rentals, responded in late 1997 by lowering its prices, extending rental periods, providing incentives for returning rentals early, and offering more new releases. Blockbuster also launched a new advertising campaign in early 1998 with the theme, ‘‘Get your movie . . . and go home happy.’’
Blockbuster and Hollywood Video were the clear leaders in the video-rental market, but both companies had to contend with independent retailers as well as national and regional chains such as third-ranked Video Update Inc. and Suncoast Motion Picture Company. The independents, on the other hand, complained that they could not compete with video giants, which were capable of instituting revenue-sharing deals with movie studios that allowed them to purchase videos at much lower costs and thus offer larger numbers of popular titles—the Independent Video Retailers Group stated that independent stores located within three miles of a Blockbuster store suffered from an 11 percent decline in revenues during the first half of 1998.