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Movie Gallery CEO argues against online movie rentals (MOVI 2Q05 conf call quotes)

Aug. 17, 2005 7:47 PM ETBBI-OLD, NFLX, MVGRQ
Ezra Marbach profile picture
Ezra Marbach

Movie Gallery (ticker: MOVI) Chairman and CEO Joe Malugen had this to say during management's Q2 2005 earnings results conference call:

....As I always say, this is a convenience store business where convenience and immediate gratification converge. In fact, most of our customers enjoy going to our stores.

....I continue to believe that online rentals are a niche business that will appeal to only about 5% of the market. And I believe that this fact is born out by the recent financial results of both Blockbuster and Netflix, which reflects their ongoing price war.

....the online model delivery model requires patience and days of planning and waiting. We know that the online model does not meet the needs of most of our consumers because for most, renting a movie is not a carefully planned activity.

....Similarly, pay-per-view doesn't meet the needs of most consumers because it is not convenient. The availability of hit titles is delayed by the release window that the studios adhere to. Pay-per-view can't provide consumers with the movies they want to see when they want to see them.

....Video-on-demand is simply not convenient because of the release windows, the digital data file size, which results in an inferior picture and audio quality, and the lack of viewing choices.

(Quotes are from the CCBN StreetEvents transcript.)

This article was written by

Ezra Marbach profile picture
Ezra Marbach is a former investment banker who lived in Beijing in 2002-03 where he studied Mandarin Chinese and worked for a venture capitalist. Ezra previously worked for Internet-based venture capital firm UniversityAngels.com. Prior to that, he worked in the corporate finance department of Gerard Klauer Mattison, a NY-based boutique investment bank. Ezra graduated from Cornell University.

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