Inside TheaterXtreme’s Bankruptcy

great article, Tom. Scott, thank you for your candor and best wishes going forward.

I wonder if both company’s would still be around today had they merged. What does everyone think?

I think both companies would still be dead and buried despite a merger. TheaterXtreme didn’t have the cash to keep afloat and Circuit has been poorly managed for years. Having said that, I’d rather read an article on your attempts to get George J. Schultze to speak on his shady, disgusting disposal of the Tweeter chain. What say you?

Something tells me George Schultze won’t be talking anytime soon. But it seems like each offered what the other didn’t have: TheaterXtreme could’ve knocked some sense into Circuit City management, if its business model was as sound at Oglum says, and Circuit City could’ve provided the financial support. But maybe there was nothing or nobody that could get through to Schultze. Who knows, but it would definitely be interesting to hear his take.

I suspect the goofy Circuit execs would’ve taken TheaterXtreme’s business model and cluelessly turned it into a Magnolia clone, staffing it with more dumb 20 something’s at minimal pay and leaving Oglum’s input on the curb. The financial support you mention basically paid for Circuit’s funeral. The #2 CE provider in the nation and then suddenly they don’t exist? I mean, c’mon. As for Schultze, he may choose to remain silent but his name will continue to be slandered , slurred and dragged through the mud. You won’t hear Schultze’s take but he certainly was on the take.

Careful what you say about those ‘20 something’s’ ... i just might be in my early 20s

Oh Steve, I doubt you’re one of the untrained 20 year olds willing to accept Circuit’s 9 bucks an hour to sell today’s technology, but that’s all Circuit was willing to hire. Is the death of Circuit really that surprising to anyone. The negative word of mouth advertising against Circuit was far more effective than their tv ads and Sunday inserts.

Haha ... I like to give myself some credit, motion. I was just saying that not all ‘20 something’s’ are young and dumb. And hopefully those who worked at Circuit City were there as part-timers trying to get through school or training for better careers. But at least Circuit City advertised. How much advertising did Tweeter do? I’m only 23 but don’t remember too much from them, and they too took a beating in the media.

You are correct. Tweeter halted all their effective advertising a few years ago and people forgot about them. The public has a short memory span. In my early 20’s, which was not that long ago, I was young and dumb too, but I never took that attitude to work. These days that will kill a service oriented business. Feels like a chat room in here so I’ll get back to my game. Nite.

Olgum’s notion of a “viable” business plan is pure BS.  If you read any of the quarterly reports they are required to submit to the SEC you will begin to understand that the biggest demise of Theater Extreme was their inability to collect from their franchisee’s.  Keep in mind these are AV techs who have no idea how to run a business getting into an industry that requires a level of cash management that escapes 99% of ALL dealers in our industry.  Clearly they were doomed to fail from the beginning.

What a lot of people failed to understand about TheaterXtreme is that we were not a projector store. I agree that just projectors would not have been viable business model. We knew that from day one. And we knew that the last thing we wanted to be was another store. Our focus on large format theaters was part of an extensively researched branding program.  Our sales never relied on projectors, but on the add-ons, furniture and decor, which comprised more then 70% of our revenue, with furniture being the fastest growing segment.

Regarding franchisee receipts, on a profit basis, it was a very small part of our revenue. We only made 4% on their sales, which is lower than the rate most state’s charge for sales tax.  The franchise revenue number stated in our filings included other items, some of which were a non profit pass through, with almost no margin.  But Brian, you still are correct, the franchises non payment did damage. We spent millions defining the concept, and not getting properly reimbursed caused part of the problem.

As far as failure goes, the Wilmington store was a corporate store and not a franchise. Independently, it was making money right up to the day the doors were locked. Our employee’s remained to the last day… and hour, hoping a bail out would occur. Of course it did not, and many good people I considered friends, were unemployed.

Our success in Delaware, our home base, is well documented with 2,200 projection theater systems installed in that area alone.  The business model is as viable today as it was when we started, especially as we retreat to our homes in this recession. But the price points still need to be reasonable, and the marketing needs to expand into the middle class.

To the many businessmen who read this, I would say open your eyes and see what we did. Look past the millions we spent on being public, and dissect the numbers. Everyone has an opportunity to learn from Theater Xtreme. Sure, mistakes were made, which is common with start-ups, but that does not mean we lacked profitability.

And while Circuit City failed, they had many good people who thoroughly vetted our concept, and were pushing hard for change. It is unfortunate their voices were not heard. That company could have been saved with proper leadership and a positive culture of innovation.  Instead leadership became fearful of change. Unfortunately, this is being repeated all over the country today, in so many large corporations.

If their was ever a time we needed innovation and creativity, it is today.

Sincerely
Scott R. Oglum
Founder

Scott, once again, I applaud you for your candor in what must be a very painful chapter in your life.

We have tried to get integrators who lost their businesses to share their stories as well, in the hopes that it would help other dealers avoid their mistakes. Most of them just want to crawl into a hole and leave it behind them, which is certainly understandable.

So, to you, thanks for sharing.

Scott Oglum was an amazing CEO for Theater Xtreme. I believe that during these trying economic times, the probability of any start-up company to survive would be utterly impossible. It is a known fact that 9 out of 10 start-up companies fail (even when the economy is thriving)! Theater Xtreme had all the potential in the world to become a successful front projection retailer. However, TX was not given much of an opportunity to prosper due to fear and financial conservatism in the consumer/investor world.
  As for Circuit City… Oglum is correct. Schoohonver was afraid of change and did not anticipate the success of Best Buy. It is very rare for a Fortune 500 company to go bankrupt. I truly believe that had Circuit prepared for Best Buy and actively sought new and innovative ways to make their stores more attractive, then they certainly would not be in the position they are in now.

It’s unfortunate that this has happened… the good news is that even though the parent corporation has had it’s troubles the individual franchise locations (now left on their own) have thrived in certain locations.

Our company has been assisting the Sacramento (Roseville) location with their marketing and advertising (TV & Print production and placement)since they opened as the newest Theater Xtreme store. Over the pst few months they have been the top producing franchise in the nation! a true testament to the value of keeping a visible presence to your target clientele during a tough economy.

We have just launched their new website http://www.theaterxtreme.tv which breaks from the look/feel of the other locations (which take a clear ‘storefront/retail’ mentality) in favor of a very high-end/custom design and interactivity.

Theater Xtreme is alive and thriving! (at least in Northern Ca)

Oh and of course if you are a franchise looking for help in this tough economy - feel free to contact us at http://www.c2mediaservices.com or me personally at .(JavaScript must be enabled to view this email address)

Dave