Blockbuster unveils download kiosk

Two-store test to begin in weeks

By Paul Sweeting -- Video Business, 5/28/2008

MAY 28 | NEW YORK—Blockbuster chairman and CEO Jim Keyes unveiled a working model of the retailer’s planned in-store download kiosk Wednesday during the company’s annual shareholder meeting here.

The working model is one of two that will be used in a two-store pilot test starting within the next few weeks, Keyes said.

“We call it a test but it’s really a beta,” Keyes told reporters following the formal presentation. “The goal is to bring all the pieces together—the content, the aggregation, the device—to try to demonstrate consumer acceptance. Once we do that, we’ll be able to think about a broader test.”

The kiosk, built for Blockbuster by NCR, a leading maker of ATMs and other self-service machines, stands about eight feet high and features a touch screen for navigation as well as a display screen for showing trailers, key art, reviews and other graphic material.

Consumers insert a portable media player into a slot on the front of the kiosk, which then downloads the selected movies directly to the player’s hard drive or solid-state memory device.

Transfers currently take about two minutes, but Keyes said that new portable media players will cut the download time to about 30 seconds.

“We want it to be an ATM-type experience,” he said. “You wouldn’t stand at an ATM for two minutes waiting for it to process your transaction, and we don’t want our customers to have to wait that long.”

For now, the kiosks work only with the Archos Generation 5 portable media player, which Blockbuster will begin selling in-store. Eventually, however, the plan is for nearly any type of portable media player or storage device to be able to plug-in and accept movies from the kiosks.

Archos also is the manufacturer of the portable storage device used by Paris-based Moovyplay, a recently launched service in France that allows consumers to download movies to the device from in-store kiosks and play them back on a TV screen using a docking station attached to their TV set.

Keyes demonstrated a similar set-up on Wednesday. Blockbuster also will sell the docking stations.

“We’re concentrating on the portable market right now, because we think there’s a growing demand out there for portability in content,” he said. “But we’re also following what’s going on in various European markets closely.”

As always with any new distribution platform, one of the biggest hurdles Blockbuster faces in rolling out its kiosk plan is securing the rights from the studios.

Keyes acknowledged that content on the kiosks will be “limited” at first, but he expects it to fill in as consumer acceptance grows.

Moovyplay managed to launch earlier this year with product from nearly all the major U.S. studios as well as several leading French distributors after multiple delays caused by holdups in the negotiations over rights.

Another reason for sticking with the Archos player for now is that its digital rights management has been fully vetted by the studios thanks to Moovyplay.

“The studios obviously have to approve each device and that takes time,” Keyes said.

The in-store kiosk is just one component of a broad digital strategy spelled out by Keyes at the meeting.

Also teed up is a relaunch of Movielink in June through Blockbuster.com. The company also is working on a set-top box that will allow streaming movies downloaded from Blockbuster.com to the TV set, similar to the device announced last week by Netflix and Roku.

“We still think it’s early for set-top boxes,” Keyes said. “We could have rolled one out months ago, but we don’t want to invest too heavily in advance of the customer.”

Blockbuster also is working on an IPTV platform that could permit streaming directly to a TV without the need of a set-top box.

Keyes had little new to share on Blockbuster’s due diligence around Circuit City, which Blockbuster has proposed acquiring for about $1 billion.

“All I can tell you at this point is that we’re still looking to complete the due diligence as quickly as possible so we can make a decision about proceeding [with the proposed deal] or getting back to what we’re already doing,” Keyes said.

He said the acquisition of Circuit City would give Blockbuster “large footprint” stores that would allow a full presentation of entertainment devices and software. Those would complement Blockbuster’s current “standard footprint” locations as well as a possible rollout of “small footprint” locations that would rely more heavily on kiosks and vending machines.

All of Blockbuster’s nine sitting directors, including Keyes and former dissident shareholder Carl Icahn, were easily reelected to the board by shareholders.