Hollywood Entertainment Corp. yesterday said it was a wrap for its online entertainment retail division, Reel.com.
The Web site is operating as an entertainment content site, but all e-commerce transactions will be redirected to Buy.com, which has contracted with Hollywood Entertainment to fulfill all of Reel’s outstanding orders.
The decision to fold Reel came after Hollywood Entertainment was unable to secure outside financing. All employees were laid off.
According to reports, Reel was seen as a drag on Hollywood’s Entertainment’s stock.
The company, which operates the Hollywood Video Store chain, saw its stock drop 75 percent over the last year, despite a 40 percent increase in operating income from its video stores.
“[Company officials] do not believe it is in the best interest of Hollywood’s banks, bondholders and shareholders to continue funding Reel from Hollywood’s strong video store cash flow,” said Mark Wattles, Hollywood Entertainment CEO.
Reel joins a small but growing list of dot-coms, including Boo.com and APBNews.com, that have shut down recently because they either would not or could not raise additional financing to stay in business.