Blockbuster eyes advanced kiosks
Chain also developing flash memory, micro SD cards as movie devices
By Marcy Magiera and Ned Randolph -- Video Business, 1/9/2008
JAN. 9 | Blockbuster plans to begin testing electronic download kiosks in its stores over the next several months, CEO Jim Keyes told analysts at the Citigroup 2008 Global Entertainment, Media and Telecommunications Conference in Phoenix Tuesday.
“We do hope to be more aggressive in testing, by the beginning of this quarter and next, some kiosks in our stores— we already now have vending in our stores, but we’re taking it the next step to the electronic download kiosk capability,” Keyes said.
Keyes addressed kiosks as part of an overall presentation on Blockbuster’s plans to evolve into “an entertainment convenience store,” comprising revamped physical stores and various methods of electronic delivery.
“We think the kiosk business is an opportunity for Blockbuster,” he said, noting that Redbox and other kiosk operators are doing the spade work of “making consumers comfortable with going up to a device and …using it to access content.”
Keyes told analysts that Blockbuster hasn't been more aggressive until now because kiosks are likely an interim step before most movies are rented in the digital form. “We are very carefully testing vending today, but with an eye more to the electronic distribution,” he said.
Responding to a question about the potential of flash memory drives for movie distribution, Keyes said “It’s a possibility. In fact we are working on a flash device ourselves. We’re working on the micro SD chip for side-load capabilities into portable devices, and we’re working on direct download to a device itself.”
Keyes emphasized his belief that the Blockbuster stores can generate more cash to fund such development.
“If we can improve that core [DVD rental] business we believe it can generate incremental cash flow that can then be used to invest in the future, for digitial downloads, for technology, perhaps for kiosks,” he said.
One key to improved store operations, he said, is greater depth of copy, noting that Blockbuster has increased copy depth since he joined and is still not meeting all its customer demand.
It is not in Blockbuster’s, nor the studios’, best interest to be out of stock on hot titles, he said, explaining that some studios believe that if a title is not available for rental, consumers will buy it instead. It is Blockbuster’s job to disabuse them of that notion he said, and to create “a different economic structure with the studios” so that Blockbuster can put more copies on shelves without shouldering all the financial risk alone.
“Our job is to prove to them that they will miss the transaction if they let it pass,” he said.
The CEO was bullish about movie rental in general amidst uncertainty in Hollywood and on Wall Street.
Keyes said Blockbuster’s DVD rentals should get good a boost early this year from consumers pinched by high gas prices, the momentum being gained by the Blu-ray Disc format, the shrinkage of competitor Movie Gallery, and the Hollywood writers' strike, which might drive consumers to rent more TV episodes.
