Blockbuster Video has offered $700 million for Hollywood Entertainment, which operates 1920 video stores and 600 Game Crazy stores.  Blockbuster operates about 9,000 stores.  The combined entity would control just under half of the video rental market, and a much smaller percentage of the sell-through business. 

An attempt to work together under a franchise arrangement was scrapped in 1999 after the FTC opposed it.  Blockbuster will probably argue that the rental home video market is now under heavy pressure from sell-through, video on demand, and online rental companies such as Netflix. 

Video rental is a tough business these days; same store sales fell over 6% at Blockbuster stores in Q3.