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NCR Pitches Major Retailers to Sell DVDs Through Dispensers

NCR Corp. (NCR) is taking a new tack in its competition with Coinstar Inc. (CSTR)’s Redbox DVD-rental kiosks, offering vending machines to retailers as a way to sell discs and free up shelf space in stores.

Stores would buy the machines, put their own name on them and use them to sell DVDs, video games or music CDs that are now sold from shelves, said Justin Hotard, general manager of NCR Entertainment, the unit that includes Blockbuster Express. NCR would continue to operate its existing DVD rental machines through its Blockbuster Express brand.

The move gives Duluth, Georgia-based NCR a new way to expand its DVD-kiosk business, which trails market leader Redbox. The business model of selling hardware and supporting software is similar to the way NCR provides automated checkout systems and ATM machines to stores and banks.

“This is a global opportunity,” said Hotard, who spoke in an interview and declined to identify companies that have been approached. “There are other countries where we are seriously investigating this.”

NCR operates about 8,000 kiosks and plans to expand the number to 11,000 this year, Chief Financial Officer Bob Fishman said during a March 9 teleconference. NCR leases the Blockbuster name from Blockbuster Inc. (BLOAQ), the operator of movie-rental stores that has filed for bankruptcy. Redbox has about 30,000 movie- rental kiosks.

DVD Sales

NCR has been experimenting with DVD sales from its Blockbuster-branded kiosks to demonstrate that customers will buy disks from a vending machine. It offers four titles, Sony Corp.’s “The Social Network,” “Salt” and “Grown Ups,” and Lions Gate Entertainment Corp.’s “The Expendables.” DVDs sell for $12.99 and Blu-ray versions for $16.99, Hotard said.

The company will add DreamWorks Animation SKG Inc.’s “How to Train Your Dragon” and “Megamind,” spokesman Jeff Dudash said.

Selling movie dispensers brings the entertainment group in line with other NCR’s businesses that include the sale of equipment for financial transactions and self-check-in at airports, Hotard said. DVD kiosks would eliminate shoplifting and could be used to sell games, music and some kinds of electronic equipment, he said.

“Renting movies out of a machine is a great starting point, but the true value of the technology is enabling the customer to do all of the things they want to do,” he said.

NCR rose 18 cents to $18.84 in New York Stock Exchange composite trading. The shares have gained 23 percent this year. Coinstar, based in Bellevue, Washington, advanced 91 cents to $45.29 on the Nasdaq Stock Market and has declined 20 percent this year.

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net

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