The only serious challenger to try to muscle in on Redbox’s kiosk turf has been ATM manufacturer NCR’s Blockbuster Express business. While it has less than a fifth of the installed kiosk base enjoyed by its red-liveried rival, NCR has plans in place for major growth as well as expansion of its machines’ capabilities.
Wedbush Securities analyst Gil Luria, quoted in a fascinating Fortune piece, has his doubts about NCR’s ability to thrive and survive in the DVD rental space. Said Luria:
“It’s a very risky endeavor because they got into a business as an entertainment retailer that they knew nothing about . . . The logistical part of it, the technology part of it, they are absolutely world class. But in terms of making merchandising decisions, negotiating with studios, and finding the appropriate business path, only time will tell if this is a stretch for them.”
Industry insiders such as Luria have reservations about NCR’s ability to secure deals with Hollywood. Luria does think, however, that Redbox’s recent accords with several studios may have made NCR’s road a little less bumpy. Said Luria:
“At the least, they can get the same settlement that Redbox has, and at best, they can get something that they feel is even more valuable,”
One factor that might work in NCR’s favor is the company’s plan to sell DVDs alongside the rental discs in its boxes, a move sure to please sellthrough-obsessed studio executives.
With the total number of kiosks the market can support generally estimated to be somewhere around 60,000 machines, how big a piece of the pie do you think NCR will grab, Insiders? What do they have working in their favor, and what do you think rival Redbox will have up its sleeve to counter them?