Co. teams with NCR for 10,000 DVD kiosks

Seeking a weapon to fight off upstarts like Redbox in the DVD vending machine biz, Blockbuster and cash-register maker NCR have teamed to roll out special kiosks this fall.

Installation of the first 50 Blockbuster-branded kiosks should start in the coming weeks, with a rollout of up to 10,000 in the first 18 months. Exact markets and locations have not been finalized.

The machines will initially offer only DVD rentals, but future applications could include digital downloads and sales of DVDs and videogames. The McDonald’s-owned Redbox has succeeded in undercutting some Blockbuster sites with machines in grocery stores or McDonald’s restaurants.

Blockbuster will report quarterly earnings Friday. Its shares have lagged badly in recent months, dropping 1% Monday to $2.77, despite signs of new strategic direction under the leadership of chairman-chief exec Jim Keyes.

Earlier this year, Blockbuster and NCR set a deal to test digital movie downloading kiosks in select Blockbuster locations. The first should be installed in two Dallas stores this summer.

Keyes said the kiosks rep “one more step in the fulfillment of our mission to transform Blockbuster into a multichannel provider of media entertainment.”

According to Blockbuster, analysts project the number of DVD-vending kiosks to grow by more than 60% over the next three years, increasing from 9,300 units at the end of 2007 to more than 22,400 by the end of 2010. Consumer spending on movies from vending machines during that span is expected to grow from $197 million to more than $760 million.

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