Hollywood Robbery

If you think that you can't teach an old economy company some new economy tricks, check out the latest online feature from Hollywood Entertainment (Nasdaq: HLYW).

The country's second largest video rental chain is rolling out personalized movie recommendations by allowing its users to rate movies on the Internet. If this sounds exactly like what Netflix (Nasdaq: NFLX) has been doing for years, you're right. The interesting thing here is that Hollywood doesn't have a dot-com rental service. With Netflix locked in a pricing war with Blockbuster (NYSE: BBI) online, it's unlikely that Hollywood Entertainment is even entertaining the notion.

Another reason why this is an unlikely prelude to a bolder online move is that Hollywood is in the process of being acquired by Movie Gallery (Nasdaq: MOVI), another rental chain. With Movie Gallery specializing in rural markets, growing the distribution center network necessary to provide speedy postal delivery and title availability just isn't feasible. In other words, it's just a bricks-and-mortar company trying to reach out to its customer base virtually.

Sure, it seems a bit primitive. After you go through the online polling process to drum up some worthy recommendations, who wants to print out a wish list and drive over to a store to track down available titles? Perhaps there is more to this. Maybe this is the first step in Hollywood going high tech with virtual queues being stored at the store level as well so a patron can simply flash a membership card and walk away with the next available title with little fuss.

Either way, it's more shameful than flattering to see Netflix aped. Wal-Mart (NYSE: WMT) and Blockbuster both copied Netflix's five-star ratings for their online DVD services and now the offline stores are following suit. Netflix was a pioneer but apparently wasn't able to find a way to prevent the upstarts from copying its queues, recommendations, and rating grids the way that Amazon.com (Nasdaq: AMZN) was able to get litigious when others challenged its one-click-buying patents.

Then again, I guess that's the way it goes in Hollywood. In the theatrical world, no good formula goes without imitators.

Some other recent stories worth rewinding:

• It was a bizarre love triangle for the rights to Hollywood's affection.
• Netflix did make it to the final round in Stock Madness 2005, but came up short.
• Talk shop with your fellow Fools in our Netflix discussion board.

Longtime Fool contributor Rick Munarriz has been a Netflix subscriber -- and investor -- since 2002. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.