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Movie Gallery : Sustaining growth by

focusing on rural and secondary Markets


Prepared by :-

Vageesh Kumar 212038
Akash Nijhawan 202002
Anwer Rahi
202009
Nitish Sharma --202024
Rakesh
Leading Movie rental store operating in Rural and
Secondary markets
Company had over 2000 retail stores located in 50
locations.
The firms quarterly revenue exceed $200 million in 2004
The company was started by cofounder Joe Malugan and
his attorney in 1985
As per the case Movie gallery were able to sustain its
growth was only because of their prime focus of working
in Rural and secondary cities.
The Market was growing at a constant rate of 6.1 % for
movie rentals.
But this is overall data and there was a larger scope in suburban and rural
market and hence Movie Gallery grew at 16.3% out-pacing the market
growth by almost 3 times.
The delay in arrival of destructive technologies (VoD,
High Speed Internet, Mobile TV etc) in the rural and
suburban areas also made them sustain their growth.


If there is any challenge which would slow down
the business of Movie gallery it can account to
the destructive technology spreading to rural and
suburban areas.
Also Movie gallery has not invested their time in
innovating into new ventures of entertainment
like pay per view etc. which can easily take over
the business of movie gallery soon.

If at all movie gallery enters in the metro markets they would face a
huge competition from industry leaders like Blockbuster and
Hollywood video who have a number of stores and experience in
dealing with the urban customers.
The huge challenge of raising capital for operations would be
incurred as the working capital is more for metro than in rural cities.
The technology is the biggest threat in metro where people often go
online and watch movies on demand and multi theaters complexes,
things like Video on Demand and Pay Per View, Multiplexes etc. are
already popular with customers there.
At first they went public in the year 1994 to manage and raise capital
for any future changes and expansion of the chain
From the year 1996 and late 1998 the company slowed it pace of
growth and devoted time towards developing a sound system,
building infrastructure, improving balance sheet and solidifying its
penetration and presence in the rural market.
The company planned to open 100 stores per year starting 1999
Another feather in the cap was the acquisition of blow out
entertainment stores .
Since their major market share was present in rural and secondary
market they had sufficient surplus time to train, research with
employees and make them a better sales person.
Surely as a group we are optimistic about the growth of movie
gallery, provided the Senior management at the company starts
innovating with the products offered by them.
They have not ventured out in going online stores and offering online
streams of the movies which could help increase their business.
The concept of movie rental were made available to the rural and
secondary market by movie gallery as motioned in the case, the
company is confident enough in the early 20
th
century that they
would make a lot of profits as the technology and concept of
multiplexes would take time to trickle down to the secondary
markets. Which is true in nature.
Plus their vision and mission are in line with what they want to be
best
the dominant entertainment source

We jointly have an opinion that future is not good for
Movie Gallery as they are not innovating to sustain their
growth.
The position of Movie Gallery was strong during the time
mentioned in the case study.
But they stood in front of the most cruel competitor, the Destructive
Technology, which spares no existing businesses.
We have seen the Audio Cassettes washing out Records and the
being washed out themselves by CDs and Digital Audio.
Similarly DVDs were at a great risk by the latest technologies like
Video on Demand, Internet Video, Pay Per View etc.
Movie Gallery filed for bank bankruptcy protection under
the U.S. Bankruptcy Code in 2007-08.
Went into losses due to decreased revenue because of
alternative sources of entertainment and movie viewing.

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