Blockbuster Express to Up Sellthrough

25 Oct, 2010 By: Erik Gruenwedel

In an effort to curry favor with studios, Blockbuster Express is looking to expand disc retail opportunities at its network of 7,000-plus kiosks in the coming weeks.

Blockbuster Express is owned and operated by NCR Corp., through a license agreement with Dallas-based Blockbuster Inc.

Speaking last week in third-quarter analyst call, John Bruno, EVP, industrial solutions group with NCR, said the company is aggressively pursuing relationships similar to its recent deal with Universal Studios Home Entertainment. That agreement affords Express kiosks the opportunity to release select Universal rental titles on street date at a premium price, in addition to sellthrough.

“We needed … to explore other opportunities with the studios … as we want to be able to use our automated retail stores for sellthrough,” Bruno said.

He said putting the sellthrough option on the table improves direct relationships with the studios, lowers disc acquisition costs and helps drive profitability.

Express kiosks generated about $30 million in third-quarter (ended Sept. 30) revenue, up from $25 million in the second quarter and $20 million in the first quarter.

When asked about the growing hype surrounding content streaming, Bruno said the impulse shopper in the super market remains overwhelmingly interested in rental discs, not digital.

Indeed, video-on-demand (VOD) revenue rose 20% to $1.2 billion through the first nine months of the year, while electronic sellthrough — mostly movies sold through Apple iTunes — increased 37% to $432 million, according to DEG: The Digital Entertainment Group.

“While we are seeing increasing growth in digital downloads … we’re generally seeing increased [market] share gains in essentially what is a flat market in the DVD rental front side,” Bruno said.

The executive said NCR would continue to focus digital distribution efforts around mobility and not set-top box platforms. Bruno said NCR would focus rollout of digital kiosks with MOD Systems (currently in select airports) going forward.

“We think that kiosks will represent a good opportunity to the offload locations for people to walk up … and quickly get access to digital content on memory sticks, SD cards for use on portable media players,” he said.

NCR reported net income of $83 million, compared with income of $15 million during the same period a year ago. Revenue, which includes ATM and related kiosk vending businesses, topped $1.2 billion, up 9% from revenue of $1.1 billion last year.