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“True Choice” plan will include Moviebeam downloads in the future
By Cindy Spielvogel -- Video Business, 5/11/2007
MAY 11 | After reporting a $14.9 million net loss for the first quarter, Movie Gallery chairman, president and CEO Joe Malugen outlined some details of his company’s coming online mail-order and digital delivery plans, which he said would fall under the name “True Choice.”
True Choice will launch this summer in a test phase, Malugen said, explaining that customers initially will be able to go to the company’s Web site, put movies in an online queue for postal delivery, and use other features such as recommendations and reviews.
Although he was not prepared to say what the pricing would be for the online service, Malugen did say that rentals would be offered both by subscription and à la carte, meaning customers will have the option of renting a single movie at a given price through the system.
The site also will offer new and previously viewed DVDs for sale.
Characterizing the limited summer test as a “friends and family” phase, Malugen said the company plans to roll out the online service in the fourth quarter.
In 2008, True Choice will expand to include the MovieBeam service, he said. The recently acquired MovieBeam will allow streaming and downloading to the Internet, set-top boxes and potentially other portable devices, Malugen said.
Movie Gallery has instituted a test of MovieBeam in four trade areas, Malugen said. He is particularly interested in MovieBeam’s high-definition capabilities.
Malugen also reiterated Movie Gallery’s plans to expand kiosks into 200 more locations this year , particularly in supermarkets and other high-traffic areas. He said the deployment would occur in the second half.
The new initiatives will be made possible partly through the refinancing agreement Movie Gallery made earlier this year.
The company’s $14.9 million first-quarter net loss, compared with net income of $40.3 million for the same quarter of 2006, was largely due to charges associated with the refinancing.
Movie Gallery also will expand its games business, planning to increase its offering of games products in 500 existing Hollywood Video and Movie Gallery brand stores.
Hollywood’s Game Crazy segment was a bright spot in the company’s first-quarter financial report, with same-store sales in the videogame category rising 26.4% in the quarter.
Movie Gallery’s total revenues for the quarter dropped 6.7% from the first quarter of 2006, to $647.7 million. Same-store sales dropped 5.9%. Total store count was down by 184 stores, a 4% reduction, to 4,589 stores.
Comp store revenues declined 4% in Movie Gallery brand stores and 6.8% in Hollywood brand stores. The Hollywood brand stores suffered an even more significant 13.1% decline in video, which was offset by the increase in videogames.
Malugen admitted that Blockbuster’s Total Access program had an impact, along with the relatively weak first-quarter movie slate and other factors, but said other operational issues at Hollywood will be improved now that Hollywood and Movie Gallery have been consolidated under new retail operations president Jeffrey Stubbs.
