December 10, 2009

NCR Deal Raises the Ante In Blockbuster-Redbox War

Give 'em credit - NCR keeps the ball rolling on DVD kiosks in real-life. They are buying locations with DVDPlay and rebranding Blockbuster. By end of year the number is expected to almost hit 4000 units. In related news a startup in Minnesota has machines with 3000 discs now + the usual legal skirmishes.

NCR to Acquire DVDPlay, Pitting Blockbuster Against Redbox in Kiosk Battle -


NCR Corp. is acquiring DVD kiosk operator DVDPlay Inc. and converting its 1,300 kiosks to the Blockbuster Express brand name, a move that challenges rival Redbox Automated Retail LLC.

The deal, expected to be announced Thursday, means NCR will end the year with 3,800 kiosks, still a small number compared with market leader Redbox's more than 20,000 U.S. kiosks. But acquiring DVDPlay gives NCR a leg up in one of Redbox's weakest markets, California, where DVDPlay has kiosks in popular spots such as Safeway Inc. stores. Redbox is a unit of Coinstar Inc.

Movie-rental giant Blockbuster Inc. licenses its brand to NCR and takes a cut of rental revenue from the kiosks, which are free-standing units that operate similar to vending machines, renting out movies for as little as $1 a night. As NCR replaces DVDPlay kiosks with Blockbuster kiosks, the company plans to move them to better locations, often outside the building so that consumers can still use them if the store is closed.

Converting kiosks to the Blockbuster brand appears to boost traffic significantly, which NCR says it learned after acquiring Houston-based TNR Holdings Corp. in April and rebranding TNR's kiosks.

Once the Blockbuster name gets highlighted onto the kiosk, "there's a greater awareness of what it does," says Alex Camara, vice president and general manager, NCR Entertainment.

Many kiosk operators ran into problems in recent weeks obtaining certain new titles, as some studios try to keep their newest releases out of kiosks to avoid devaluing a product they are trying to sell with a list price close to $30. The kiosk operators had sidestepped restrictions several studios placed on distributors that do business with kiosks by purchasing DVDs from big-box retailers like Wal-Mart Stores Inc. and Best Buy Co.

But now, many retailers appear to be placing restrictions on the numbers of DVDs kiosk operators can purchase, typically letting kiosk representatives purchase just three copies of any single title. That is leading to shortages of many new titles in some areas, such as Fox's "Night at the Museum: Battle of the Smithsonian," Warner Bros.' "Terminator Salvation," and Universal Pictures' "Public Enemies."

Redbox has lodged antitrust lawsuits against News Corp.'s Twentieth-Century Fox, Time Warner Inc.'s Warner Bros. and General Electric Co.'s Universal Pictures. Last week, it amended its complaints to reflect the restrictions at retailers. News Corp. owns The Wall Street Journal.

Raising the ante in the low-cost rental business, Blaine, Minn.-based Mosquito Productions recently unveiled a kiosk with six-cents-an hour rentals for new titles. Its BigBox DVD kiosks, which hold between 2,000 and 3,000 discs compared with around 500 for Redbox and 950 for Blockbuster Express, are in just four locations in Minnesota and Wisconsin.

Separately, Columbus, Ohio-based DVD kiosk operator E-Play LLC filed a lawsuit in Franklin County Common Pleas Court on Nov. 16 against NCR, alleging NCR was inappropriately using some E-Play technology without licensing it. A judge has ordered the matter into arbitration.

A spokesman for NCR said the company doesn't comment on litigation.

Posted by staff at December 10, 2009 08:30 AM