Company Loans DVDs Via ATM-like Kiosks

ByPaul Eng

June 29, 2004 -- It's 2 a.m. Do you know where your movies are?

When it comes to renting a DVD, consumers already have plenty of choices, from mail-order setups such as Netflix to the local store of national chains such as Blockbuster or Hollywood video.

But now a new option is in previews — automated DVD vending machines. Much like ATMs, these DVD and video game disk dispensers are self-contained "stores" that can be placed practically anywhere to reach consumers looking for a quick entertainment fix.

Last month, for example, fast food giant McDonald's announced it would expand a pilot program to install such DVD rental machines in more than 100 of its restaurants in the Denver area. The idea, said officials at the restaurant chain, is to give its customers an extremely easy way to "get dinner and a movie."

The latest entrant into the self-serve rental experience has a bit of a different approach on how to serve entertainment junkies.

MoviebankUSA, a four-month old startup in New York City, is working to roll-out a movie-rental concept that borrows both from the high-tech world and from more familiar neighborhood video stores.

The company, backed by private European investors, plans to open a 24-hour storefront that contains only self-service machines made by Video Systems Italia of Verona, Italy.

The ATM-like machines are essentially personal computers that use Microsoft's Windows XP operating system. Each ATM-like machine feature a touch-sensitive screen, a small keypad, a credit card reader, and a dispensing slot.

To use the machine, consumers can browse for a title with a touch-screen display. To rent a particular title, a user merely swipes his credit card on a machine and a robotic arm behind the screen scans its inventory for the correct tamper-resistant, bar-coded DVD and dispenses it.

A flat-fee of $3.50 is charged to the renter's credit card or debit card account for each 24-hour period they keep the DVD.

"Places like Blockbuster make a majority of their money from late fees," explains Olivier Delouise, president and CEO of MoviebankUSA. "At Moviebank, the customer is king... You decide when you want to return it."

To make the rental process even more appealing — and hopefully gain a loyal base of local users — Delouise says the company will also offer free membership with some added perks.

By signing up, members get their own account that is protected with a personal ID number, or PIN, just like a bank account. The account then tracks which movies or video game disks a member already has rented, so members can avoid taking out the same title by accident. And since sign-up is free, parents can set up accounts for their kids that restrict what they can rent — say, to only PG-rated movies and non-violent video games.

More importantly, since MoviebankUSA units are basically just PCs, Delouise says each dispenser can be given a unique Internet address, allowing the dispensers to be networked together. That would then allow members to access the service online over any Web browser and search what disks are available at machines closest to their home or work. They can even instruct a particular dispenser to "hold" a movie — say the latest blockbuster hit — and it will be reserved just for them for 24-hours.

"It's a fun and friendly experience to renting movies," says Delouise. "People — especially kids now — prefer to be in front of screens and seeing things virtually rather than roaming through aisles and aisle looking through racks for movies."

While the service may be convenient for busy urban dwellers, Delouise thinks the pricing will also get others to try out the service. Members get a personal magnetic membership card that offers special rental rates: 99-cents for six hours or $2 for 24-hours. They can also get $50 pre-paid rental cards that offer up to $70 worth of rentals or $100 card that would be good for $150 worth of rentals.

Delouise says the firm is prepared to open up to 10 MoviebankUSA locations in New York this year. Its first store, a 500-square foot outlet in the trendy SoHo district, is expected to be ready by August.

Delouise says the company plans to open a total of 50 such storefront in New York with hopes of a nationwide rollout of as many as 3,000 locations shortly thereafter.

To reach that number, Delouise says he expects the company to partner with as-yet unnamed others, such as supermarket chains or even development corporations building luxury apartments or office complexes.

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