DVDs top McDonald’s menu

Redbox kiosks expand to all U.S. markets

By Susanne Ault -- Video Business, 2/24/2006

FEB. 24 | Following a successful limited test, McDonald’s is set to sell DVDs in all of its U.S. markets with Redbox vending machines.

Buena Vista Home Entertainment’s Lady and the Tramp will be offered first on Feb. 28 in St. Louis, Baltimore, Houston, Minnesota and Salt Lake City.

The studio’s The Chronicles of Narnia: The Lion, the Witch and the Wardrobe will follow in the same five McDonald’s Redbox cities plus Denver on April 4. At that time, Redbox will have finished upgrading its hardware in Denver, where the company first rolled out machines in 2004.

Each title will sell for $20. Lady and the Tramp will be bundled with coupons for three free one-night McDonald’s rentals. Narnia similarly will be tagged with freebies.

Redbox DVD vending machines are installed in more than 800 McDonald’s restaurants. This month, McDonald’s rented its 8 millionth DVD. In December alone, McDonald’s rented 1.1 million discs.

The move to sell-through was solidified after Redbox sold 25,000 units of niche baseball title Millions of Cardinals Memories: Busch Stadium 1966-2005 in four weeks. Redbox exclusively offered the title in St. Louis for three weeks starting Nov. 29, before distributor Hart Sharp Video released it elsewhere.

“That just confirmed to us that consumers like the idea of being able to purchase DVDs at Redbox,” the company’s VP marketing Greg Waring said. “The natural next step was to expand the program in other markets. But we’re still learning and will try different things.”

Through the end of the year, Redbox is limited to selling Buena Vista feature films. McDonald’s can only promote Walt Disney products, according to a 10-year exclusive merchandising pact. But that is set to expire after 2006.

It’s expected that Redbox will stock rival supplier titles for sale starting in January.

Redbox will hype its Lady and the Tramp DVD bow with e-mail blasts and in-store signage. With higher profile Narnia, Redbox hopes to line up national radio, print and online support.

Many retailers sell DVDs for much less than $20. But the company believes this is still a valuable proposition for people.

“We’re hoping that offering free movie rentals makes it a nice convenience,” Waring said. “And it’s a convenience of being able to get it while you’re eating at McDonald’s.”