Movie Gallery Announces Acquisition of MovieBeam Transaction Provides Strong Technology Platform to Diversify Movie

Gallery's Business

    DOTHAN, Ala., March 7 /PRNewswire-FirstCall/ -- Movie Gallery, Inc.
 (Nasdaq:   MOVI) today announced it has acquired substantially all of the
 assets, technology, network operations, and customers of MovieBeam, Inc, an
 on-demand movie service. The acquisition of the MovieBeam service provides
 Movie Gallery with a compelling technology platform to enable digital
 content delivery and drive future revenue growth. Terms of the transaction
 were not disclosed.
     The MovieBeam service is a leader in delivering digital entertainment,
 providing customers a convenient way to rent movies from home. The
 MovieBeam content delivery network, which is available in 31 major
 metropolitan areas across the U.S., uses over-the-air datacasting
 technology to provide instant access to an ever-changing lineup of new
 releases and popular favorite movies- on-demand from virtually every major
 Hollywood studio.
     In addition to MovieBeam's proprietary set-top box based content
 delivery network, Movie Gallery intends to use MovieBeam's existing
 infrastructure to underpin the development of alternative digital delivery
 capabilities. Movie Gallery believes that the state-of-the-art MovieBeam
 technology will be instrumental in its efforts to digitize and deliver
 content to its customers - - in both standard definition and high
 definition formats -- via new mediums including, for instance, downloading
 or streaming of movies over the internet, internet protocol-based content
 delivery and other developing channels.
     "We believe the MovieBeam service provides the best video-on-demand
 service available in the marketplace today and is a strong compelling
 complement to the consumer retail video store experience," said Joe
 Malugen, Chairman and CEO of Movie Gallery, Inc. "Our acquisition of
 MovieBeam is the first phase of our long-term strategic plan to provide
 digital content to consumers. We will begin merchandising the MovieBeam
 service in our Hollywood Video and Movie Gallery stores and on our websites
 in the near future and we have exciting plans to build upon the existing
 content digitization and broadcast platforms."
     Movie Gallery expects that the total incremental expense related to
 MovieBeam, including the initial acquisition cost and any ongoing
 development expenses, will be less than $10 million in 2007.
     About Movie Gallery
     Movie Gallery is the second largest North American video rental company
 with over 4,600 stores located in all 50 U.S. states and Canada operating
 under the brands Movie Gallery, Hollywood Video and Game Crazy. The Game
 Crazy brand represents 633 in-store departments and 17 free-standing stores
 serving the game market in urban locations across the United States. Since
 Movie Gallery'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 the Company, please visit our website
     About MovieBeam
     MovieBeam is a leader in delivering digital entertainment, providing
 customers a convenient way to rent movies from home. The MovieBeam
 movies-on- demand service provides instant access to an ever-changing
 lineup of new releases and popular favorites from virtually every major
 Hollywood studio, including select movies in HD -- always 100 to choose
 from, with up to 10 new movies automatically delivered digitally each week
 using over-the-air datacasting technology. The MovieBeam service is
 available in 31 major metropolitan areas across the U.S., with availability
 in nearly half of U.S. households. More information is available at
     Forward Looking Statements
     To take advantage of the "safe harbor" provisions of the Private
 Securities Litigation Reform Act of 1995, you are hereby cautioned that
 this release contains forward-looking statements, including statements
 regarding the Company's plans and intentions for integrating the MovieBeam
 acquisition and pursuing related strategies, as well as estimated
 incremental expenses, that are based upon the Company's current intent,
 estimates, expectations and projections and involve a number of risks and
 uncertainties. Various factors exist which may cause results to differ from
 these expectations. These risks and uncertainties include, but are not
 limited to, risks related to the integration of acquisitions generally and
 the risk factors that are discussed from time to time in the Company's SEC
 reports, including, but not limited to, the Company's annual report on Form
 10-K for the fiscal year ended January 1, 2006 and subsequently filed
 quarterly reports on Form 10-Q. The Company undertakes no obligation to
 update any forward-looking statements, whether as a result of new
 information, future events, or otherwise.
     For Movie Gallery
     Analysts and Investors: Michelle K. Lewis, Movie Gallery, Inc.,
     Media: Andrew B. Siegel of Joele Frank, Wilkinson Brimmer Katcher,
     212-355-4449 ext. 127

SOURCE Movie Gallery, Inc.

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