Movie Gallery Buys MovieBeam

Movie Gallery announced that they have acquired the MovieBeam service for an undisclosed amount.

In addition to MovieBeam's proprietary set-top box based content delivery network, Movie Gallery intends to use MovieBeam's existing infrastructure to underpin the development of alternative digital delivery capabilities. Movie Gallery believes that the state-of-the-art MovieBeam technology will be instrumental in its efforts to digitize and deliver content to its customers - - in both standard definition and high definition formats -- via new mediums including, for instance, downloading or streaming of movies over the internet, internet protocol-based content delivery and other developing channels.

This is getting crazy. We now have Amazon, Apple, Blockbuster, Microsoft, Netflix, Movie Gallery, Wal-Mart and a bunch of others trying to get an early lead in the movie download business.

Thanks to Eric & Rick for sending this in.

Comments

[Edward R Murrow]

How does a broke-@ss company get the money for this?

It does give them a double-play, though.

[Firstlawofnature]

How will those hicks figure this out? Stacking videos on a wall is one thing but trying make this dog bark is gonna be impossible. Damn studios keep sucker'n these dopes on crap businesses.

[Aron]

Jump on the goofy train !!!

If they buy GameznFlix they'll secure the TRIPLE-PLAY! No one will be able to compete.

[Firstlawofnature]

Maybe it will work...they can take back the tanning bed and nail salon space and sell moviebeam boxes along with flat screen TVs. They might give BBY a run for their money next x-mas. After that they can make some monkeys fly out of their arses.

[type-cast]

"If they buy GameznFlix they'll secure the TRIPLE-PLAY! No one will be able to compete."

The phrase "Too Little, Too Late" springs to mind. GameznFlix is worse than BB Online and that's saying something. They make Greencine seem fast, from what I've heard. BB's in the position to offer Triple Play within months. Added to the fact that GameznFlix sucks, you can count Movie Gallery out.

It would be nice if NF and BBO would ship us games and/or porn by mail. That is oe of the few advantages still Greencine has (porn). I think someone will eventually be able to put pressure on them by combining all three into one service. Perhaps Amazon?

[hueristix]

This IS getting crazy. I have been waiting for video and the Net to converge for yeaaaars now; and not in the sense of mailing DVDs! These are the beginning days that we will chuckle at.

GameznFlix, or at least vid games by mail doesnt seem like a profitable business, as only certain games become classics, it is more focused on new releases. I have found it takes me a few weeks to finish the average game lately; so it makes more sense to buy and sell on ebay, making sure to keep the game minty.

As far as porn, that is private, between me, ATT, the Feds, and the binaries groups. The last thing I want is my overactive imagination let loose on some "previously handled" porn movies. ewwwww.

[Dan Luther]

While I applaud MOVI's acquisition of a digital delivery system, I tend to think that this may only be a temporary fix. I'd like to see what plans MOVI has for expansion in this arena, or if they're just trying to milk an acquisition for market share. This particular version of digital delivery to me is a non-starter, even with the reduced price of the box.

Currently, MOVI doesn't have a cohesive global operations strategy, so here are some suggestions to help bolster sales and increase operating efficiencies, which will ultimately affect their stock price:

1: Reduce the 5 day rental to 4. This is not a huge decrease in time to view movies, and it increases the availability of on-hand titles by 20%.

2: Set up a global operations data center to manage all aspects of franchise data management. Although I'm not 100% sure how the chain of operations goes, but it appears that local franchises are far too dependent on "regional managers" to do things like ordering, payroll processing, etc. This goes with #3.

3: Install business cable modem service at all locations, with VPN connections back to corporate data center, and use VOiP (Vonage/Cox/Comcast) for local phone service. This can save several hundreds of dollars per franchise over a year, and in fact the cost of local business telephone service would nearly subsidize the switch to local cable modem/VOIP services in nearly all major metropolitan markets.

4: Using #2 and #3, have a global membership card. This above all was the thing that never made sense to me, having to use a separate membership for each store. Hollywood Video operations can be fully integrated at this point along with discount prepaid rental cards, and MOVI is a serious, legitimate competitor to BBI.

5: Again using #2 and #3, reduce the number of credit terminals by relaying credit back to central data center for clearance. Major savings here.

Some of the items I described would easily eliminate hundreds of dollars per month per franchise. Another good use of that technology would be for in-store content delivery. If you've been to a local franchise, you would have noticed the custom "preview" commercials and select music videos playing at every Movie Gallery. This is a custom DVD which is sent to each franchise. Digital delivery can also eliminate the overhead associated with distribution, which is roughly ~$1.30 per disk per store, every two weeks.

Increasing operational efficiencies, integrating businesses, and careful expansion can only go so far. In order to facilitate a truly meaningful market position that brings us to #6.

6: MOVI needs to form a partner alliance with Netflix.

This partnership would work as follows: MOVI will have access to the NFLX library of 66,000+ titles, enabling MOVI customers who don't want to start a NFLX subscription (for whatever reason) to rent hard-to-find titles from NFLX's vast library via MOVI's local franchises, which would also become local return points for NFLX, possibly allowing for in-store rentals for those returns. While this may fly in the face of NFLX's hinely honed "throttling" policies, this arena could be the "magic bullet" NFLX is looking for.

Such a partnership would be a win-win for both businesses. NFLX benefits by having a viable competing solution to BBI's "Total Access" program, eliminating a major source of customer "churn", and also saving money on first-class return envelopes. Movie Gallery benefits by allowing customers access to nearly any DVD title in existence, thus becoming the preferred choice in local rentals. MOVI and NFLX could also save by sharing in market advertising costs.

Implementing these steps would send a clear signal to investors and creditors that both NFLX and MOVI are viable investment opportunities with good outcome potential.