Movie Gallery
From Wikipedia, the free encyclopedia
| Movie Gallery, Inc. | |
 |
|
| Type | Public (NASDAQ: MOVI) |
|---|---|
| Founded | 1985 (Dothan, Alabama) |
| Headquarters | Dothan, Alabama |
| Key people | Joe T. Malugen, CEO & Chairman |
| Industry | Retail (Department & Discount) |
| Products | VHS, DVD, and video game rentals and sales |
| Revenue |  $2.6 billion USD (2005) |
| Employees | 45,000 |
| Slogan | Play on. (Movie Gallery) & We are Hollywood. We are Entertainment. (Hollywood Video) |
| Website | Movie Gallery Corporate Information |
Movie Gallery (NASDAQ: MOVI) based in Dothan, Alabama, is the second largest movie and game rental company in the United States, behind Blockbuster Video. It rents and sells DVDs, movie videos, and video games. It has over 4,700 stores in North America, operating mainly under the Movie Gallery and Hollywood Video brands. The Hollywood Video brand is operated out of Wilsonville, Oregon.
Contents |
[edit] History
It is a great place to get movies from. They carry a great selection.
[edit] Hollywood Video
Hollywood Video, operated from Wilsonville, Oregon, is a video tape, video game and DVD rental shop chain in the United States. Created in 1988 by former CEO Mark Wattles, it was the largest direct competitor of Blockbuster Video until it was purchased by Movie Gallery. It also operates Game Crazy departments within its stores (and a few free-standing locations), which are dedicated to buying, selling and trading video games and related items. Employees of Hollywood Video are expected to adhere to the mission statement, "Hollywood is dedicated to exceptional guest experiences delivered with genuine warmth and friendliness."
[edit] Purchase of Hollywood Video
Unhappy with the direction that the board of directors was taking the company, founder Mark Wattles attempted to purchase the company back to go private, with the help of Leonard Green & Partners, a buyout firm. This began a bidding war for Hollywood, starting the chain of events that would bring Hollywood under Movie Gallery's flag.
Hollywood Video was the target of a hostile takeover attempt, initially announced at the end of December 2004 by competitor Blockbuster Video. In February 2005, Blockbuster announced an exchange offer of $14.50 per share ($11.50 cash and $3.00 in Blockbuster shares)[1].
In order to create a stronger position against the hostile takeover, Hollywood Video agreed to a buyout on Monday, January 10, 2005 by its smaller competitor Movie Gallery. Movie Gallery paid $860 million, $13.25 per share, and the assumption of $380 million in debt. Stocks closed at $13.85 on January 10 after this news. Blockbuster then dropped its purchase plans, citing anti-trust concerns. Movie Gallery completed its purchase of Hollywood Video on April 27, 2005.
[edit] Movie Gallery today
Today, Movie Gallery operates about 2,400 Movie Gallery and 2,000 Hollywood Video locations in the United States. Approximately 650 of the Hollywood locations include Game Crazy departments, and there are around 20 separate Game Crazy stores. Canadian operations include over 200 "Movie Gallery" branded stores, as well as approximately 60 under the VHQ brand in western Canada. There are also 9 stores in Mexico.
[edit] Financial and Operating information
The "Movie Gallery" and "Hollywood Video" brands target quite different markets (smaller rural vs. urban/suburban), store size (3000-4000 square feet vs. 4000-6000) and inventory (3000-15000 items vs. 25,000). For this reason Movie Gallery will be maintaining the Hollywood brand and store format, and the two brands currently maintain separate management operations teams. Game Crazy operations report through Hollywood managers at the regional level.
The first year following the Hollywood purchase saw financial difficulties for Movie Gallery. The acquisition incurred significant debt obligations, and the company also pointed to a mature video store industry, lackluster performance of the new movie releases during the year, and various other factors. The company posted a net loss of over $500 million for 2005, mainly due to a number of one-time charges ("impairment of goodwill") relating to the valuation of the company. The stock price, which was in the $28 range in April 2005, and briefly touched over $34 later in the year, dropped precipitously in the following months, spending most of 2006 below $5. The company's financial situation also forced it to negotiate the relaxation of various terms in its debt arrangements [2]. In response, Movie Gallery has announced initiatives to reduce store sizes, sublease some existing space within stores, and reduce or eliminate new store openings (although the previously planned 140 new stores for 2006 are unaffected).
[edit] Game Crazy
To compete in a growing video game market, Hollywood Entertainment launched a store-within-a-store concept called Game Crazy which features the ability to buy, sell, and trade video games, systems, and accessories inside of Hollywood Video stores. Game Crazy offers gamers the ability to try any game before they choose to purchase or rent. Most Game Crazy stores do not sell computer games (except for exclusive, nationally high-demand titles) but offer a wide selection of older game systems and games, including NES, Sega Genesis, Super Nintendo, Dreamcast, and Nintendo 64 systems. However, the future of such older games at Game Crazy is in doubt, as buy-back prices for many of these older systems and games have been greatly reduced, many to as low as a penny. The need to create space for next-gen systems may also be a factor, especially considering Game Crazy locations tend to have limited floor and shelf space. Such consoles as the Neo-Geo Pocket and Sega Saturn, which used to be company supported, were dropped long ago. Game Crazy is soon to be forgeting of all these old systems (Game Boy, Dreamcast, Saturn). In fact they are not selling old games at some stores. In some stores no games or systems were being sold.
At certain locations within the country, GameCrazy does offer cash for trades. They also price match competitor trade values and sale prices. Game Crazy also offers "wishlist" and "special order" features. Wishlists merely hold the next copy traded in at that store, which is automatically flagged by the POS system. Special orders have copies shipped in from other stores (for an extra $6 fee) to allow customers to request copies of games that may not be in stock. They also offer the MVP customer membership. For $20 for the first year then $15 every year thereafter customers get a 10% discount on used games and an extra 10% bonus on trade-ins, and a free magazine subscription. Game Crazy MVP accounts are separate from Movie Gallery MVP accounts.
In 2004, Game Crazy started the Asylum program for frequent customers who have MVP accounts. The inclusion to Asylum is a company decision, and a customer can not request to join. The only requirement to be accepted into Asylum seems to be accumulating a certain amount of "points" by purchasing "high ranked," games. It offers an online message board, chatroom, and contests exclusive to members. Asylum is hyped as being a "secretive" club, taking quotes from the movie Fight Club to push its image of being private- however, this seems to be little more than an advertising gimmick as Asylum is not in any way a secret to Game Crazy employees or most customers. In addition, an Asylum page link exists in plain sight on the Game Crazy homepage although a password and I.D. number is required to get any farther into the sister site.
Game Crazy was originally only operated out of Hollywood Video locations, but has since expanded into several standalone stores.
[edit] Hollywood Video features and policies
One of the primary features of Hollywood Video rentals is a universal returns system:
- All rentals (DVD, VHS, and Games; New Release and Film Library) are five days, every day (some Hollywood Video locations do offer ten day rental on Game Vault game titles).
- Returns are always due before midnight, regardless of the time the store closes, which is generally between 10 pm and Midnight Sunday-Thursday, and Midnight Friday and Saturday; however, some stores stay open as late as 4 AM.
Hollywood Video, at the same time as competitor's movie passes, introduced a program called the "Movie Value Pass" which allows customers to rent unlimited amounts of movies. The pass allows customers to have up to three movies checked out for free at any one time. The major restrictions on the pass are that customers must wait an average of four to eight weeks for new releases to be added to the list of MVP available titles. Customers are also still limited to five day rentals and will pay late fees on their free rentals if they are not returned on time. "MVP Premium" was started in November 2005 that allows customers to rent any movie in the store for a maximum of fifty days. The difference between the two MVPs is that Premium costs either $24.99/month or $29.99/month in order to have either two or three free movies out at a time, respectively. With MVP Premium there are no late fees as long as the promotion is active on your account (maximum of fifty days before the movie is charged off, see below).
Beginning in June of 2005, Hollywood Video began accepting Trade-Ins to be sold as Previously Viewed. To trade in a movie, a valid membership is required. In addition, only titles and editions carried by Hollywood Video are acceptable for trade-in, therefore most Full-Screen DVDs were not accepted. In June of 2006, Hollywood Video started carrying both full and widescreen copies of major titles to offer customers a choice, so now most DVDs can be traded in regardless of format.
In August of 2006 Hollywood Video began a new program called Play Guard which is essentially an insurance policy for your rentals. For a fee of twenty five cents per individual rental (DVD, VHS, Game) guests can purchase Play Guard to protect them from paying charges for a broken or cracked item. In the past if a guest rented an item and they broke it, the guest was responsible for paying for the item at its previously viewed price. Now if they purchase Play Guard any item that is broken while in their possession may be returned without any obligation to pay for it. For its inagural month all proceeds went directly to the Starlight Starbright Foundation, and from then on out 10% of the proceeds will go to the foundation.
To sign up for an account, Hollywood Video requires that those wishing to become members must have a valid piece of government-issued photo identification. Also required is either a debit or credit card - in the event that an item is 50 days overdue, items will be charged off on the card. Movies are charged off at 12.99 for the film, and 37.00 for the late fee, totaling 49.99 plus tax. Games total out at 79.99 plus tax. If the customer does not have a debit or credit card, proof of auto registration or a utility bill from the last 45 days (that is not past due) with the same address as the I.D. shown may be used (although some stores now require that all customers have a debit or credit card on file). Customers must be at least 18 years of age and have a working telephone number. At many stores, I.D. must be shown every time a customer wants to rent a movie or change information on their account. Some stores still enforce a policy of requiring only a membership card.
