FORT LAUDERDALE, Fla., Nov. 9, 2004 (PRIMEZONE) -- Gold Entertainment Group, Inc. (Pink Sheets:GEGP), marketer of the nation's only multi-level, fixed-price DVD rental program, today announced the pricing strategy for its program in light of the highly publicized price war between Blockbuster (NYSE:BBI), Netflix (Nasdaq:NFLX), and Wal-Mart (NYSE:WMT) in the online DVD rental space.
Gold Entertainment CEO Francis Fytton reported today that the price of his company's offering will remain at $20 per month for its base, three-movies-out-at-one-time option.
Like subscribers to the other programs, subscribers to Gold Entertainment's DVD rental program can watch as many DVDs as they choose for a fixed fee, with no assessed late fees or scheduled due dates on rented movies. Program customers can keep a revolving library of up to three DVD's at a time, or more for an increased fee, and exchange them for new available DVDs as often as they choose. The actual number of movies they rent depends on how quickly they view and return each of their DVDs, and because customers can return their DVDs in pre-paid envelopes at any time, shipping is free both ways.
"Gold Entertainment believes that our multi-level model brings the added benefit of enhanced customer service through our network of distributors, and we would much rather wait out this price war, maintaining our current levels of customer satisfaction and profitability, than cut corners on inventory or quality of service to remain price competitive," said Francis Fytton, CEO and founder of Gold Entertainment. "Further, virtually every industry analyst agrees that any price level under $20 for this type of offering is simply unsustainable in the long run, and that this price war is a short term situation, which the laws of profit and loss will quickly correct."
Effective November 1, nearly two months after Blockbuster entered the online DVD rental market, Netflix lowered its monthly subscription fee for the three-movies-out-at-one-time option from $21.99 to $17.99, according to the Associated Press. Earlier this month, Blockbuster announced that it would undercut Netflix by $0.50, bringing its monthly base price to $17.49 from $19.99; and according to published reports this week, Wal-Mart has responded by lowering its base online DVD rental subscription fee from $18.76 to $17.36 per month.
Harry Katica, an analyst with Aperion Group LLC, said in a recent news article that the lower prices are not sustainable: "Any type of aggressive pricing is temporary," he said. "I don't think any of these businesses can survive at $17 a month."
"Gold Entertainment also believes these short-term savings are not exorbitant and should not cause an exodus of subscribers from any provider; we believe the same applies to our subscribers, particularly since many of them are also generating significant income from our products and services -- income that more than offsets any savings with other providers," added Fytton. "With Gold Entertainment's recent nationwide consumer rollout, we feel we are poised to capture a significant share of the market in time. It is important for us to build our company on a solid foundation, such that when prices stabilize, we already will have proven our superior service and financial stability, and will be ready to capture the masses of the market."
About Gold Entertainment
Gold Entertainment Group, Inc. (Pink Sheets:GEGP) is the developer and marketer of the nation's only multi-level, fixed-price DVD rental program, and seeks to become a leading home entertainment sales and rental company. Gold Entertainment markets its products and programs exclusively through an independent network of distributors; its distributors promote the company's DVD products, which are shipped directly to consumers. For more information, please visit the company's web site at www.GoldEntertainment.com.
Legal Notice Regarding Forward-Looking Statements: "Forward-looking statements'' as defined in the Private Securities Litigation Reform Act of 1995 may be included in this news release. These statements relate to future events or our future financial performance. These statements are only predictions and may differ materially from actual future results or events. Gold Entertainment disclaims any intention or obligation to revise any forward-looking statements whether as a result of new information, future developments or otherwise. There are important risk factors that could cause actual results to differ from those contained in forward-looking statements, including, but not limited to risks associated with changes in general economic and business conditions, actions of our competitors, the extent to which we are able to develop new services and markets for our services, the time and expense involved in such development activities, the level of demand and market acceptance of our services, and changes in our business strategies.