RealTime IT News Folds

Hurt by lack of funding from investors, Hollywood Entertainment Corp.'s video and DVD shop closed its doors this week, laying off more than 200 employees.

Beginning Tuesday, ceded its merchandise to Net superstore Apologizing for "reduced title availability," assured consumers that all orders placed through June 12 would be filled.

On Tuesday, Hollywood decided that's site will continue to operate, but all commerce transactions will be directed to Ongoing expenses associated with maintaining will come from Hollywood's existing marketing budget.

Hollywood Entertainment, which grabbed two years ago for about $100 million, expects to lose about $25 million.

" has built an excellent Web site for movie buyers and those interested in movie content. Revenue, customer traffic and customer satisfaction have all been very strong," said Mark Wattles, chairman and chief executive officer of Hollywood Entertainment, which owns the Hollywood Video chain of video superstores.

"Unfortunately the business model of rapid customer acquisition required large losses and significant cash funding. As a result of the major declines in the value of publicly traded e-commerce companies, we have been unable to obtain outside financing for Reel and do not believe it is in the best interests of Hollywood's banks, bondholders and shareholders to continue funding Reel from Hollywood's strong video store cash flow. Despite significant customer enthusiasm, we cannot sustain this business."

Wattles said keeping open was no longer realistic because Hollywood's stock dropped 75 percent during the time operating profits from its video stores were up more than 40 percent.

With almost 1,800 stores in 46 states, only Blockbuster owns a larger share of the video rental market than Hollywood Entertainment. is the latest store to suffer the e-commerce shakeout fate, joining British high-end fashion store and

Some news content sites are encontering the same fate. Last week, crime news site folded, laying off 140 emplyees. and Oxygen Media also announced cutbacks last week.