Abacus Entertainment product available in HK, Taiwan

HONG KONG — Rafael Bellavita is confident his MK1 will do a roaring business, once people grasp the concept of the machine.

MK1, which stands for movie kiosk, allow customers to preview trailers of DVDs or VCDs via a touchscreen monitor at retail outlets before they buy. Launched in January, the Abacus Entertainment product has been rolled out across Hong Kong and Taiwan, where it has partnered with video distributor Deltamac. The machine will be introduced to Korea in September and Japan in December, plus nine other Asian countries in the next 18 to 24 months.

Abacus leases the machines to retail outlets that sell DVDs and VCDs. The revenue comes from advertisers, who can place their ads around, above or below the monitor or place their products on the shelves beside it. About 100 trailers are available on the kiosk at any given time, in categories such as action, new releases, kids and comedy; the lineup is rotated about every two weeks.

It was easy getting eight major Hollywood studios and local distributors to cooperate and allow use of trailers, but Abacus CEO Bellavita encountered greater resistance from retailers, including some who only wanted to place the kiosk outside their stores. But Bellavita has quickly won over some retailers, such as HMV in Hong Kong. “This is new to us,” says Phoebe Chan, marketing manager for HMV Hong Kong. “But it’s better for customers to know more about a product before buying, and it’s a good selling tool.”

Trailer previews are especially appealing in this part of the world because few are shown before theatrical screenings. Plus, many theatrical releases from the U.S. go straight to video here. “The only movies we get to know are those with big promotional budgets,” Bellavita says.

Stores in U.S. and Europe are eager for Abacus to provide the kiosks, but Bellavita says he won’t until his company is prepared. He considers Hong Kong, with 42 kiosks, and Taiwan, with about 150 kiosks, smaller test markets. “The U.S. wouldn’t want less than 5,000 to 10,000 machines for just one chain,” Bellavita says. “I’m a believer in technology, but I also know it breaks down, and I don’t want to be going in unless we’re prepared.”

Bellavita, an Italian based off and on in Hong Kong, stumbled across the Japanese technology while working for Salomon Bros., where he worked as both head of equity sales and head of asset management.

The proprietary technology behind the touchscreen interface was developed using an instant-access storage system, manufactured by Advanced Technology & Systems Co. in Japan.

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