EMERYVILLE, Calif. -- Reel.com, the Internet subsidiary of Hollywood Entertainment based here, plans to close operations due to mounting losses. It laid off all its 150 employees, it was announced last week.
onth, according to Mark Wattles, chairman and chief executive of Hollywood Entertainment. "I've just given up on the ability to make a profit on the e-commerce business," he told the Wall Street Journal.
Reel.com reported a loss of $82.5 million in 1999 on revenue of $41.9 million, said David Martin, chief financial officer. The company will take a one-time $25 million charge in the second quarter to write-down assets, terminate leases and lay off employees. Hollywood also signed an agreement with buy.com, Aliso Viejo, Calif., to send users who want to buy videos to the Internet superstore.
The Reel.com Web site will be run by Hollywood Entertainment offering content like movie reviews and celebrity profiles. The company said it would begin testing video on demand over the site later this year.
Meanwhile, Wattles said Hollywood would concentrate on its video rental business. Hollywood Video generated a profit of $46 million in 1999 on revenue of just over $1 billion, the company reported.