Hollywood's Swap Meet

It turns out that the copy of Ishtar collecting cobwebs in your basement isn't worthless after all. Even Hudson Hawk and The Alamo have some salvage value as video "rentail" chain Hollywood Entertainment (NASDAQ:HLYW) rolls out a new service this weekend that will let you trade in your old flicks for store credit.

It won't be a get-rich-quick scheme, unless your closet is brimming with dated celluloid. Hollywood is providing an average credit amount of $3 for approved DVD titles. And while VHS films will bring in only a scant $0.50, pocket change is still better than heaving forgotten movies into the dumpster.

If the practice sounds familiar, it's because video game chains like GameStop (NYSE:GME) and Electronics Boutique (NASDAQ:ELBO) have been doing it for years. Catering to cash-strapped teens, video game retailers have been able to build attractively priced collections of used software that doubles as a magnetic way to draw in store traffic from gamers who have outgrown some of their titles.

It's a good move for Hollywood. As Blockbuster (NYSE:BBI) appears to be more interested in taking on Netflix (NASDAQ:NFLX) in mail-delivered rentals, Hollywood is working on creative initiatives to keep its storefront business thriving. With Hollywood heading toward its merger with Movie Gallery (NASDAQ:MOVI) later this year, it's vital for the stand-alone, bricks-and-mortar outfits to appeal to an audience being lured by the convenience of fresh DVD rentals in their mailbox.

Though this move won't find eBay (NASDAQ:EBAY) sweating too much -- you'd think that second-hand celluloid would still fetch higher prices in the open eBay market than the pittance that Hollywood is paying -- you've got to hand it to Hollywood. And when you do, why not hand it that copy of Elektra, too?

Electronics Boutique, Netflix, and eBay are all Motley Fool Stock Advisor recommendations. You can subscribe for six months without risk today.

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• Paying For Hollywood's Fame

Longtime Fool contributor Rick Munarriz can think of a few movies he wouldn't mind palming off for cash, some of which are still shrinkwrapped. He does own shares in Netflix. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.