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Movie Gallery Expands Digital Distribution Via Kiosks

19 Nov, 2009 By: Erik Gruenwedel

Movie Gallery Nov. 19 said it will install 100 test digital movie kiosks in select Gallery and Hollywood Video locations starting in January.

Wilsonville, Ore.-based Gallery, which operates about 3,000 Gallery and Hollywood Video stores, is working with Los Angeles-based upstart Digiboo to offer digital movie, music, video game and TV show sales and rentals delivered on a flash drive via a USB port.

Financial terms of the partnership have not been disclosed.

Digiboo’s touchscreen kiosks allow consumers to plug in a small, portable flash drive and download copy-protected content for rent or purchase in less than 30 seconds. The content can be played on a variety of devices, including laptops, PCs, mobile devices and televisions.

Gallery earlier this month began offering rival MOD Systems’ Secure Digital (SD) card kiosks in select locations capable of offering more than 1,000 new-release and catalog titles for rent.

“Innovation is critical to our strategy as people are constantly evolving in the way they want to acquire and consume entertainment and other media,” said Clifford Torng, chief marketing officer with Gallery.

The No. 2 DVD rental chain lags significantly behind Blockbuster Inc. and Netflix in the distribution of entertainment via digital platforms, including notably the ability to rent content online.

More importantly, privately-held Gallery has escalated shuttering underperforming stores (about 450 this year), including 200 in-store Game Crazy locations, often reportedly with little advance notice to personnel and landlords.

Gallery subsequently established a toll-free hotline for concerned landlords.

Edward Woo, analyst with Wedbush Morgan Securities in Los Angeles, said Gallery is facing the same problems as Blockbuster, but without the security of the latter’s recent $645 million financial lifeline.

“I'm skeptical as they have much bigger issues to deal with such as Netflix and Redbox,” Woo said. “I wonder how much they can invest in this business since they are reportedly having trouble paying rent.”

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