News
Public Media Works signs letter of intent with EntertainmentXpress
March 16, 2010
Public Media Works announced today its intent to acquire EntertainmentXpress, whose business model is built around the rapidly growing digital distribution network of kiosks for consumers to buy or rent movies, games and other entertainment media.
"We have been studying the market and sizing up the best way for us to take advantage of our access to the entertainment industry and media content. We strongly feel that EntertainmentXpress has a business model and existing relationships which can make them stand out in the DVD and video game rental kiosk marketplace," said Joseph Merhi, Public Media Works CEO, in a press release.
"We believe that EntertainmentXpress should be uniquely positioned to realize advantages that can lead the way in the industry of digital entertainment distribution. We believe these synergies would enhance the profit potential of their distribution model and the depth of their relationships with grocery stores and quick-serve restaurants," he said.
"The ability to integrate our business plan with Public Media Works, which is solidly anchored in entertainment business, creates the possibility of offering our distribution partners a compelling solution," said Garrett Cecchini, CEO of EntertainmentXpress. "We believe that by combining exclusive branded entertainment content with physical DVD distribution we can bring a unique experience to customers that will draw them to our distribution partner's branded kiosks, the collateral benefit being increased foot traffic and storewide revenue. To make that happen we address current and anticipated consumer demands for convenient and affordable ways to present digital entertainment venues, in a variety of digital formats, through a proven distribution system."
According to The NPD Group, a market research company, DVD and video game rental kiosks are receiving increasing attention from consumers, which is leading to more competition for consumers among traditional video rental stores and subscription rental services. While traditional store rentals still account for the greatest share of video rental turns among U.S. consumers today, kiosk rentals are experiencing more growth than either subscription services or store rentals.
"The DVD and video game rental kiosk business is growing at a significant pace at the expense of video subscription services and traditional brick-and-mortar video store rentals," continued Cecchini. "NPD forecasts that video rental kiosks may make up nearly 30 percent of video rentals in 2010. Our plan is to take advantage of this expansion."
EntertainmentXpress plans to roll out a network of conveniently located, self-service kiosks which deliver demographically relevant digital media content to consumers. Their core media distribution business model comprises the rental and sales of DVDs and video games and more through kiosks located in quick-serve food locations, grocery stores and other high-traffic, public venues. A fully integrated solution for in-store advertising and kiosks pre-designed to be media filling stations for digital storage devices are features intended to differentiate EntertainmentXpress in the marketplace.
"Based upon existing relationships we are seeking agreements with distribution partners representing some 35,000 grocery and 30,000 food service locations. At full service each location is capable of generating $3,000 per month in revenue. These prospective distribution partners alone represent a substantial addressable market with an annualized gross revenue potential of $2.3 billion," said EntertainmentXpress president and COO Larry Gitlin. "If we can differentiate ourselves in the marketplace by combining with Public Media Works we believe we can dramatically increase our odds of harvesting this revenue potential over time."
The company's letter of intent with EntertainmentXpress provides for the parties' to work together to negotiate and execute a definitive agreement for the company's acquisition of EntertainmentXpress. The parties anticipate any resulting acquisition would close by May 1, 2010.
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