NCR Rolling Out More Blockbuster Express DVD Kiosks
March 14 2010 - 8:29PM
Dow Jones News
NCR Corp. (NCR) has bagged a growing convenience-store chain as
the next retailer to roll out its Blockbuster Express-branded
DVD-rental kiosks.
Sheetz, a closely held, Altoona, Pa.-based chain that has
marched southward as it expands, is adding the movie-rental kiosks
at nearly all 365 locations, NCR is expected to announce Monday.
The rollout is one of the biggest so far in NCR's efforts to have
some 10,000 kiosks operating by year end through its partnership
with Blockbuster Inc. (BBI). The current number is about 4,000.
That's still a small number compared with the more than 20,000
movie-rental kiosks operated by Coinstar Inc.'s (CSTR) Redbox unit
across the U.S.
But it's an important business for NCR, which is known for its
ATM and point-of-sale machines at checkouts all over the world.
"Entertainment for us is one of our emerging businesses--one
that we're very focused on and one that we're very invested in,"
said Alex Camara, vice president and general management of NCR
Entertainment.
The company spent $60 million last year to grow the
entertainment business, including buying two other leading kiosk
operators. And it has said it wants to be the global leader in
self-service entertainment. That could include not only movies but
also music and books, and it could mean NCR expands into other
forms of delivering entertainment, including digital and by-mail
services.
NCR wouldn't comment on whether it might be interested in buying
any of Blockbuster's businesses, which already include a by-mail
service and an in-home digital download service.
But it's clear the current kiosk partnership is critical for
Blockbuster, which wants to move more quickly into alternative
methods of movie-rentals besides its roughly 4,000 U.S. stores.
Those stores have lost business to Redbox and to Netflix Inc.'s
(NFLX) subscription-based movie-rental service.
Blockbuster licenses its brand to NCR, sharing in the revenue
from the free-standing kiosks, which dispense DVD rentals for as
little as $1 a day. The movie-rental giant also supplies NCR with
some movies and has provided expertise related to consumer
demographics, Camara said.
At the same time, NCR is running the kiosk business, including
paying for and servicing the machines, which reduces Blockbuster's
risk and helps it conserve capital needed to service debt and to
run its stores. Blockbuster Chairman and Chief Executive Jim Keyes
said last month the company is "delighted" with its partnership
with NCR.
For NCR, the arrangement so far has also worked well, Camara
said, though he declined to comment on Blockbuster's financial
condition. "We believe they have a major role to play in the DVD
market, both in the physical and digital and by mail," he said. "We
see them as a good partner."
The Blockbuster brand "has been very powerful on the kiosk," he
said. "It's been very strong in terms of getting the customers to
use us quickly. That was another piece for Sheetz that was
important. They (customers) know the brand; they like the
brand."
An NCR survey asking consumers which of six kiosks they would
most likely choose to rent a DVD movie found that 47% of people
named Blockbuster as their first choice--more than Redbox,
Hollywood Video and the other three brands combined. Nearly 80% of
those surveyed included Blockbuster among their top three
choices.
Camara said NCR's reputation for security and reliability, as
well as the digital signs playing advertisements and movie trailers
on its Blockbuster Express kiosks, have given it an edge, too.
NCR has also been pleased with test results of kiosks that can
provide digital movie downloads onto secure-digital, or SD, memory
cards for play on devices such as laptops. Those tests have been
with Blockbuster and Hollywood Video, whose Movie Gallery Inc.
(MVGRQ) parent last month filed for Chapter 11 bankruptcy
protection.
NCR expects to roll out several hundred such kiosks and doesn't
yet know how many will be with the Blockbuster brand. But NCR is
also shopping the technology to other retailers who may want to
offer their own digital-download services in stores.
-By Mary Ellen Lloyd, Dow Jones Newswires, 704-948-9145;
maryellen.lloyd@dowjones.com
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