In a move to retain store customers attracted to online DVD rental services, Movie Gallery Inc. is planning to launch its own online movie rental service in mid to late 2007, the company reports. Movie Gallery owns and operates more than 4,600 video stores under the names Movie Gallery, Hollywood Video and Game Crazy.
CEO Joe Malugen, in a conference call with analysts, said Movie Gallery will not position the new online rental service to compete aggressively in the online DVD market. Instead, the new service will provide additional convenience as a way to retain existing customers, he said.
“Our plans for this service are to provide an efficient, low-cost model that will provide additional customer convenience and satisfaction,” he said. “We do not intend to spend outrageous advertising dollars announcing this service, nor will we spend significant dollars attempting to acquire customers in the online environment.”
Movie Gallery also recently acquired MovieBeam, a service that delivers movies over broadcast TV waves to home set-top boxes, with wireless transfer of content to televisions. But Malugen suggested that Movie Gallery might eventually use the MovieBeam platform to deliver movie content through additional channels.
“This same technology is extremely versatile,” he says. “We are exploring a number of exciting opportunities to build on MovieBeam's digital delivery capabilities to provide new options for our customers. We plan to build upon MovieBeam's content digitization and broadcast platforms, and as new trends in entertainment emerge, the MovieBeam platform and backbone will be instrumental in allowing Movie Gallery to continue serving customers through various alternative delivery channels.”
Movie Gallery reported a net loss of $15.1 million on revenue of $663.3 million for the fourth quarter of 2006, as revenue declined 1.9% from the year-ago period, Malugen told analysts. Full-year 2006 revenue grew 25% to $2.5 billion from $2 billion in 2005. The year-to-year increase was partly the result of the 2005 acquisition of Hollywood Video, which contributed revenue to Movie Gallery for 36 weeks of 2005, the company said.
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