Another Win For Netflix Et Al: Movie Gallery May Shutter 1,000 Stores

Movie Rentals

At this rate, how long will it be before there are no movie rental stores left? Movie Gallery, which has 2,700 movie rental locations in the U.S., is considering closing 1,000 of them, the WSJ reports. The chain had already closed 500 stores in 2009. Blockbuster (NYSE: BBI), meanwhile, said a few months ago that it would close as many as 960 of its 3,750 stores this year.

One difference: Blockbuster is at least trying to transform itself into a “multi-channel brand” with kiosks, on-demand streaming and a mail order movie business. Movie Gallery is not (or certainly is not emphasizing it, judging by the content on its website, although it did launch an iPhone app and the ability to reserve movies via its website). At one point, Movie Gallery planned to launch an online DVD rental service, although I can’t find any evidence it ever did so. And it sold its on-demand movie service MovieBeam three years ago in the midst of its bankruptcy proceedings.

Movie Gallery is now considering filing for bankruptcy protection once again, according to the WSJ. It’s still undecided exactly how many stores will close (An aside: The Movie Gallery-owned Hollywood Video in my neighborhood in Seattle suddenly shut down in late November).

The winners in all of this are Netflix (NSDQ: NFLX), RedBox, and even Blockbuster’s kiosks, which continue to benefit as the movie rental store chains shrink their retail footprints. Merriman Curhan Ford analyst Eric Wold says that by shutting 1,000 stores, Movie Gallery would essentially be handing over about $200 million in annual rental revenue (via Home Media Magazine).

I’ve put in a request for comment with Movie Gallery to learn more about its digital efforts and the possible store closings and will update if I hear back.

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