By Rick Aristotle Munarriz
March 20, 2007
Recommended (8)
It took Movie Gallery (Nasdaq: MOVI) some time to realize it, but now it knows its customers no longer want to be tethered exclusively to bricks-and-mortar stores. The chain of 4,600 DVD rental stores will be widening its automated rental kiosk initiative while also launching a Web-based store solution in the coming months.
Movie Gallery already has roughly 75 kiosks under its Hollywood Video brand, located in unconventional locations like Cub Foods grocery stores. The Hollywood Video Express kiosks accept credit cards and dispense movies and games. The credit cards are then charged for the amount of time the rental is out (or up to a limit of $19.99 for movies or $49.99 for games). Renters don't have to be card-carrying members of Movie Gallery or Hollywood Video to use the kiosks. Movie Gallery plans to deploy 200 more units between now and the end of the year.
On the Web-based front, the company plans to roll out an online video store to its existing customers later this year. Limiting its initial offering to existing chain-store users seems to follow in the Total Access footsteps of Blockbuster (NYSE: BBI).
Total Access has been good to Blockbuster, with 2.2 million subscribers at the end of last year, heading toward 4 million users by the end of 2007. Is Total Access profitable? It probably won't be for awhile, but at least Blockbuster is finally drawing a crowd again.
Movie Gallery's move comes after a lackluster quarterly report, but it's not necessarily a surprise. It announced that it would be acquiring set-top celluloid distributor MovieBeam earlier this month.
Move over, Netflix (Nasdaq: NFLX)? Nope. However, Netflix believers who underestimated Blockbuster's tenacity in cyberspace know better than to take a sleeping behemoth lightly now.
The competitive landscape is getting crowded in a hurry. Apple (Nasdaq: AAPL) and Amazon.com (Nasdaq: AMZN) now have ways to get digitally delivered films into your PCs and your televisions. Even a leader like Netflix can't afford to fall asleep at the wheel. If it does, who knows where that kind of carnage might turn up? (My guess: Spitting out of a Hollywood Video Express vending machine.)
Wonder what direction the movie distribution business is headed? Check out:
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Longtime Fool contributor Rick Munarriz is a Netflix shareholder and plans to stay that way. He is also part of the
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