Blockbuster plots in-store downloads

Company is in negotiations with studios for content

NEW YORK -- Blockbuster Inc. will launch in the coming month a pilot test of in-store kiosks that will allow consumers to download movies onto portable devices in two minutes.

Chairman and CEO James Keyes unveiled the trial Wednesday in his first annual shareholder meeting at the helm of the video rental giant.

But he said the company is still in negotiations with studios about content deals for the kiosk trial.

As a result, Blockbuster will likely have limited movies on offer in the trial, but "we'd love to have everybody" on board for this, Keyes told reporters after the meeting. He declined to predict how many films would be available in the pilot and from which studios.

Keyes acknowledged that the kiosk pilot is likely coming well ahead of broad consumer demand for such services and should therefore only be seen as one additional distribution channel for the company as it tries to offer entertainment content whenever consumers want in whatever form they want.

The download time of the kiosk, designed in its pilot version by NCR, which also builds airline ticketing kiosks, is targeted to get down to 30 seconds over time as Blockbuster is striving for an ATM-like experience, Keyes said.

As demonstrated by the CEO in the annual meeting Wednesday, the kiosk allows store visitors to search and browse for downloadable films, watch trailers and buy or rent movies with a credit card or pre-loaded Blockbuster card. Over time, it will also allow them to subscribe to kiosk or other service usage.

Keyes later told reporters he could envision a monthly subscription fee of $10 along with a free device give-away down the line.

Games would be "a wonderful addition" to the kiosk service in the future as well, he said.

Under his vision, kiosk deployers would bear much of the cost and share in the revenue with studios and Blockbuster.

The trial will launch with a couple of stores in Blockbuster's home market of Dallas and originally work only with devices made by Archos.

However, Keyes said the goal is to add deals with more device makers over time. If successful, the kiosks could over the coming years also be rolled out in locations outside Blockbuster stores, such as at airport gates.

In a demonstration, Keyes rented a movie for $3.99 plus tax via a few touches on the kiosk screen, charged the transaction to a credit card and quickly downloaded the film to an Archos device via a docking station.

Keyes has started redesigning the layout and look of Blockbuster stores, and on Wednesday, he also showed renderings of some of the changes. The renderings showed stores with lower shelves, clearer and more colorful signage and designated areas for electronics, kids offers and the like.

Among the about 50 people present at the intimate midtown Manhattan annual meeting Wednesday were Billboard board members and industry veterans Ed Bleier and Strauss Zelnick. Board member Carl Icahn couldn't make the meeting, Keyes said.
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