Rich Fiscus
23 Jan 2008 18:57
A comparison of Netflix and Movie Gallery is a study in opposites. In the last year Netflix managed to withstand a challenge for online rental supremacy from Blockbuster and come out the undisputed leader, with Blockbuster apparently giving up on previous online ambitions to concentrate on brick and mortar operations where their primary competition, Movie Gallery, was declaring bankruptcy and closing stores.
The trends for both Movie Gallery and Netflix appear to be continuing in the same direction for the fourth quarter of last year. Netflix today announced a revenue increase of 9% from the same period in 2006. Meanwhile Movie Gallery has filed a motion asking the U.S. Bankruptcy Court in Richmond, VA to approve an expenditure of around $1 million dollars for employee compensation related to closing more stores.
There was no mention in the motion of how many of the more than 3,600 Movie Gallery, Hollywood Video, and Game Crazy locations are expected to be closed, although an estimate of "several hundred underperforming or unprofitable potential store closure locations" to be closed in the near future "as part of a ‘Phase II’ store closure initiative.”
Netflix, on the other hand, appears to be positioning themselves to compete with the growing number of streaming and Video On Demand (VOD) offerings, including Vudu and Apple TV by allowing customers increased access to their Watch Instantly streaming video service and a project to develop a set-top box with LG.