Movie Gallery Inc., one of the largest chain store buyers in the United States and owner of both Hollywood Video and Movie Gallery chains, said it plans to follow Blockbuster's lead and provide an online DVD rental service to accompany its nationwide chain of stores. According to a recent report, the company has been losing customers to online rivals like Netflix Inc. and Blockbuster Inc.'s online service.
Reporting recent share losses, the company said it plans to create a low-cost version of online rentals available to existing customers. Chief Financial Officer Johnson said that the company also planned on fewer store closures and openings this year than in 2006.
According to a Reuters report, Movie Gallery has been struggling since 2005, when it took on heavy debt to purchase the Hollywood Video chain and was hit a short time later by an industry-wide downturn in rental revenue.
At the end of fiscal 2006, the company had $1.1 billion in debt and $33 million in cash. Last week, the company announced the purchase of MovieBeam, a VOD service that was spun off from the Walt Disney Co. last year.
