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McDonald's Kiosks Set to Sell DVDs

25 Jul, 2005 By: Holly J. Wagner

McDonald's has fielded Redbox video vending machines in about 550 stores to date. As consumers catch on to the program, the company is working on offering sellthrough as well as rentals from the machines as early as next year.

“It has always been part of our plan to offer sellthrough in some form,” said Redbox spokesman Greg Waring. That notion contributed to the company choosing a new machine design by Solectron that can accommodate discs in jewel cases for rental as well as discs in standard DVD packaging for sellthrough.

The company is busy changing out earlier versions of the video vending machines for the new, higher-capacity machines from Solectron. That change will standardize the machines and their functionality so customers can rent and return in different locations nationwide. So far, inter-city rentals are only available in stores in the Utah, Houston and Minneapolis markets.

“Each of the new markets is outperforming Denver when they launched,” Waring said.

Retrofits will bring Hartford, Conn.; Denver; Las Vegas; and Washington, D.C., into the same national network.

Once the retrofits are done, the company hopes to test sellthrough late this year, Waring said. There was no word on which titles and what pricing would be in the sellthrough test. But customers who keep a disc for 25 days or more own it after paying $1 a day for that time, so lower pricing for sellthrough discs is virtually assured.

Assuming a limited location test late this year goes well, the entire Redbox network could be offering sellthrough along with rentals by the first quarter of next year, Waring said.

Titles that do best in the machines are those that fit with McDonald's primary customer demographics: mothers with children, teens and young adult males. Titles are standardized across the system, and a complete list is available at www.Redbox.com.

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