SOURCE: GameZnFlix, Inc.

September 05, 2007 09:00 ET

John Fleming, CEO of GameZnFlix, Inc., Outlines Plans

FRANKLIN, KY,--(Marketwire - September 5, 2007) - GameZnFlix, Inc. (OTCBB: GZFX) CEO, John Fleming, has issued an open letter to the company's shareholders and the marketplace conveying his positive outlook for the company's future. Mr. Fleming stated, "I would like to take this opportunity to communicate with GameZnFlix shareholders and the marketplace regarding the company's business operations and growth prospects. While GameZnFlix continues to face challenges, I believe that the company can and will succeed. Over the last several months, GameZnFlix has made significant changes in its strategic focus, operations, and research and development. Below, I will describe several of these changes."

Market Analysis and Strategic Focus

In January 2007, GameZnFlix engaged Moroch Advertising agency to generate a comprehensive marketing program for 2007. GameZnFlix selected Moroch, with offices in 22 cities and clients ranging from Columbia Pictures to the U.S. Army, because of the agency's experience in obtaining and applying information about the needs and preferences of U.S. consumers. Moroch's research identified three distinct target demographics that are ideal for the GameZnFlix service. Moroch convened focus groups in several major cities to learn how potential GameZnFlix members viewed the GameZnFlix service and which features they liked and disliked. The agency also generated several versions of a new "look and feel" for GameZnFlix, including company colors, logos and website designs. Moroch was prepared to generate a large-scale advertising campaign and recommend media buys throughout TV, print, and online media. Due to the high cost of pursuing such a campaign, and with the return on that investment uncertain, GameZnFlix chose instead to maximize its investment in Moroch's services in more immediate and cost-effective ways by making strategic changes to its core service and marketing efforts.

Core Service. GameZnFlix has modified its core service and consumer value proposition to emphasize video games. GameZnFlix had previously attempted to serve as a one-stop shop for DVD and video game rentals, which required the company to maintain a broad inventory of both movie titles and games. GameZnFlix is now a "gamer-driven" source for video game and DVD rentals, with the emphasis on offering our members the most popular new games for each game platform carried by GameZnFlix. While GameZnFlix will continue to offer DVDs, it will focus on current, gamer-oriented hit movies.

Brand Development and Marketing. GameZnFlix is also proud to introduce its new brand identity, encompassing a distinctive logo, color scheme and brand message of "Life Without Pause." GameZnFlix has also launched its new website through both www.gnfgames.com and www.gameznflix.com, which will enable GameZnFlix members to personalize their browsing and renting experience according to their individual preferences.

In the past, GameZnFlix used multiple advertising mediums to promote its services, ranging from national TV spots to online search engines. Past experiences coupled with Moroch's research and analysis has helped us identify which forms of advertising are likely to be most cost-effective and yield the greatest return. GameZnFlix will focus on these advertising mediums to most efficiently and effectively market its services.

Operations

GameZnFlix is determined to become profitable. In an effort to achieve this goal as soon as possible, GameZnFlix has improved its operations in the following ways:

--  Developed a new purchasing algorithm with the goal of improving
    membership satisfaction with our inventory.
    
--  Worked with the United States Post Office to increase our shipping
    efficiency while reducing the company's manpower requirements.
    
--  Transformed its customer service department by adding direct telephone
    support during the company's normal business hours, expanding the number of
    customer service personnel across the country to handle online inquiries 7
    days a week.
    
--  Imposed mandatory salary reductions for key management executives.
    

Research and Development

Since December 2006, GameZnFlix has allocated a portion of its resources to research and development activities. The two principal projects have been GNF Entertainment and GNF Digital. GNF Entertainment operated two free-to-air satellite television channels, which were intended promote GameZnFlix while generating an additional revenue stream. As GNF Entertainment did not reach its revenue goals, GameZnFlix ultimately discontinued operations.

Entertainment industry analysts have predicted significant growth for the digital distribution of movies and TV programs between 2006 and 2008. In 2006, GameZnFlix began researching methods of delivering movies and other home entertainment by online streaming and secure download. At the same time, GameZnFlix entered into discussions with a variety of content owners, ranging from major U.S. movie studios to individual filmmakers.

As the major studios have required large financial guarantees for the rights to distribute their movies via the Internet, GameZnFlix has concentrated on licensing quality independent films. In January, GameZnFlix launched GNF Digital, an online movie store that currently offers over 200 movies for download-to-own. GameZnFlix has also secured the rights to distribute another 300 movies by streaming or download. Moreover, the GNF Digital storefront can be modified for selling other forms of digital entertainment, such as games. In light of the strategic advantages of establishing the company's own digital distribution platform, GameZnFlix considers the monthly costs of GNF Digital to be acceptable and a reasonable business investment.

Outlook

GameZnFlix remains committed to achieving profitability and realizing sustained success and growth. To this end the company has: (1) refocused the company's marketing to better reach customer demographics per the Moroch research; (2) developed a member interactive website to enable our members to better control our website when visiting and providing them with a quicker way of reaching the games and movies they like; (3) adopted a cost-efficient distribution workflow that has enabled the company to eliminate over 30 employees, while maintaining timely order fulfillment throughout the country; (4) overhauled the title selection and purchasing methods to better satisfy members' demand for the most popular new game titles; and (5) implemented a disciplined and refocused plan to reach profitability.

About GameZnFlix, Inc.

GameZnFlix is primarily an online provider of video game and movie rentals, and additionally, provides video on demand movies for purchase. With memberships starting as low as $8.99, subscribers can rent both video games and movies with no late fees or due dates. Membership for rental services is located on the Internet at www.gnfgames.com and video on demand is located at www.gnfdigital.com.

Notice: Certain statements in this news release may contain forward-looking information within the meaning of Rule 175 under the Securities Act of 1933 and Rule 3b-6 under the Securities Exchange Act of 1934, and are subject to the safe harbor created by those rules. All statements, other than statements of fact included in this release, including, without limitation, statements regarding potential future plans and objectives of the company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Technical complications that may arise could prevent the prompt implementation of any strategically significant plan(s) outlined above. The company cautions that these forward-looking statements are further qualified by other factors including, but not limited to those set forth in the company's Form 10-KSB filing and other filings with the United States Securities and Exchange Commission (available at http://www.sec.gov/). The company undertakes no obligation to publicly update or revise any statements in this release, whether as a result of new information, future events or otherwise.

Contact Information

  • CONTACT
    John Fleming
    GameZnFlix, Inc.
    Tel: (888) 542-6817, Ext. 2
    www.gnfgames.com