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Gallery Campaigns to Spur Summer Rentals

21 Jun, 2001 By: Joan Villa

Movie Gallery is launching two summer rental programs aimed at enticing customers to visit more often and to spend more when they do, raising the profile of the third largest chain.

“We’re looking at being the first choice in each market we serve in video rental and that’s what top brands do, they give customers the first and best choice,” Movie Gallery senior v.p. of marketing Ted Innes says.

He stopped short of throwing down the gauntlet for Blockbuster, but acknowledges the chain is preparing to be a major national competitor.Although he wouldn’t say whether Blockbuster’s programs influenced MovieGallery’s strategy, the upstart’s promotions look similar to Big Blue’s.

Both chains’ campaigns suggest that customers can escape the heat and fillleisurely summer days with movie and game rentals.

Movie Gallery’s extended viewing program, being tested in a limited number of locations, rewards consumers who rent three or more new release titles in a visit with an extra rental night free. A Power Play discount rental card provides six game rentals or eight movie rentals for $19.99, a 30avings from individual pricing. Card sales end July 4 but the rentals can be used until Dec. 31, 2002.

“We’re taking advantage of the free time people have and that’s the summer period. We’re basically giving our customers a good deal,” Innes says.

The two initiatives are similar to Blockbuster Inc.’s recently launched extended 12-hour rental term, 30-day/$19.99 DVD pass and 30-day/$30Entertainment Pass.

With more than 1,030 stores, Movie Gallery competes with Blockbuster in about 30% of its markets.

A national presence is virtually assured since Movie Gallery purchased the bank debt of 350-store Video Update last month and is now in a position to take over many of those locations, says analyst Robert DeLean with Morgan Keegan & Co.

“The three major chains, certainly Blockbuster, Hollywood, but even MovieGallery now, have a lot of power with the studios,” says DeLean, putting all three in a “strong spot” to negotiate better revenue-sharing and copy-depth deals.

As a result, competitors in the rural and secondary markets where Movie Gallery is strongest will begin to feel the pressure, and more independent stores will be sold off or closed, he predicts. “You’ll continue to see mom-and-pops get squeezed,” DeLean adds.

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