Hollywood Video and Movie Gallery Stores to Be Exclusive Rental Outlets for Lile Entertainment Group Titles in North America

Hollywood Video and Movie Gallery Stores to Be Exclusive Rental Outlets for Lile Entertainment Group Titles in North America

Movie Gallery, Inc. (MGI) and Lile Entertainment Group (LEG) Finalize Two-Year Exclusive Rental Deal

PORTLAND, Ore., Dec. 8 /PRNewswire-FirstCall/ -- MGI, through its subsidiary Hollywood Entertainment Corporation, has entered into a two-year exclusive alliance with LEG, which will cover MGI's Hollywood Video stores in the United States as well as its Movie Gallery stores in the United States and Canada. The agreement enables LEG to maintain non-exclusive rights to distribute its titles through online, mail and digital distribution channels, while reaching a broader audience for its films through Hollywood Video and Movie Gallery stores.

Under the terms of the agreement, MGI will cover the cost of LEG home entertainment acquisitions in exchange for an undisclosed share of rental revenues from LEG produced and acquired titles. MGI will have an exclusive 90-day window for the in-store rental distribution of each LEG title as it becomes available. During the period of exclusivity, Hollywood Video and Movie Gallery stores will be the sole "Brick and Mortar" retailer of LEG titles.

"We're delighted to make this alliance with Hollywood Video and Movie Gallery as we simultaneously build a fully integrated independent studio. Core to this enterprise is having a national home entertainment partner that makes LEG titles available to millions of consumers across the United States and Canada." said Stephen Lile, LEG's Chairman and CEO. "We saw a great market opportunity to fill the void created by the abandonment of small to mid level budget movies by the studios and independent distributors. This alliance allows LEG to gain a national foothold in the most significant piece of the film revenue pie ... home entertainment. For Hollywood Video and Movie Gallery, it gives both brands strategic position further up the film distribution channel, which will likely segue into theatrical revenue sharing. The unique combination of MGI's established in-store retail experience with the national brand power of the Hollywood Video and Movie Gallery brands is one of the biggest factors that attracted us to this alliance. The fact that both companies are headquartered in Portland, Oregon was the icing on the cake for us."

"This agreement with LEG is a great opportunity for our Hollywood Video and Movie Gallery stores to provide our customers with convenient access to the best of independent film," said Sherif Mityas, COO and President of Retail Operations for MGI. "This alliance combines the best of both worlds; our seasoned retail experience with the entrepreneurial spirit of LEG. Moreover, Mr. Lile has assembled a world-class team of Hollywood insiders representing the entire studio value chain from distribution to production. We look forward to working with LEG to drive innovations in the marketing of home entertainment, and to dramatically expand the quality of our independent titles."

In addition to carrying LEG titles in its Hollywood Video and Movie Gallery stores throughout North America, MGI will be installing special "Exclusive to Hollywood Entertainment" sections in its Hollywood Video stores, which will include LEG titles along with other independent movies from a variety of distributors. Hollywood Video and Movie Gallery also plan to highlight LEG titles on Hollywoodvideo.com and Moviegallery.com.

About Movie Gallery, Inc.

MGI is the second largest North American video rental company with approximately 3,300 stores located in all 50 U.S. states and Canada operating under the brands Movie Gallery, Hollywood Video and Game Crazy. Since MGI's initial public offering in August 1994, the Company has grown from 97 stores to its present size through acquisitions and new store openings. For more information about MGI, please visit our website: www.moviegallery.com.

About Lile Entertainment Group

LEG is a privately held fully integrated boutique studio, based in Portland, Oregon. LEG specializes in TV and feature film development, production and acquisitions, foreign sales, as well as theatrical and home entertainment distribution. LEG is headed by Stephen Lile, Chairman and CEO. Mr. Lile is the Co-Founder and former CFO of Ensequence, the worlds leading interactive television company. For media contacts visit our website: www.legfilms.com.

Media Inquires Contact: Movie Gallery, Inc., 503-570-5233

Source: Movie Gallery, Inc.

CONTACT: Movie Gallery, Inc., +1-503-570-5233

Web site: http://www.hollywoodvideo.com/
http://www.moviegallery.com/
http://www.legfilms.com/

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