NCR deal boosts Blockbuster kiosk business as competition heats up with Redbox

NCR deal to boost Blockbuster kiosk business

REDMOND, Wash. — Blockbuster Inc.’s move into the DVD rental kiosk business — a challenge to rival Redbox — is getting a boost.

NCR Corp. said Thursday it has bought out DVDPlay, a privately held company that operates 1,300 DVD rental machines in the U.S. and Canada. NCR plans to convert the kiosks into Blockbuster Express machines in a revenue sharing deal.

The move comes a week after NCR said it would install 200 Blockbuster Express machines in Duane Reade drugstores in New York City.

Blockbuster says it will have 2,500 NCR-operated kiosks around the country by the end of the year.

Still, that is dwarfed by Redbox, which has been expanding aggressively. The Coinstar Inc. subsidiary responded to Blockbuster’s announcement Thursday by saying it has now installed more than 22,200 kiosks, averaging 900 installations per month for the last six months.

Blockbuster is racing to compete with upstarts in the DVD rental business that have stolen traffic from its traditional stores. Los Gatos, Calif.-based Netflix Inc. has siphoned business with its mail service and streaming video, and Redbox has undercut its pricing with its $1-per-night fees.

Blockbuster, which is based in Dallas, has responded with its own mail and streaming services as well as the NCR deal to set up competing kiosks.

NCR, based in Dayton, Ohio, said its machines hold more than 900 movies (compared with 630 in Redbox kiosks) and that customers will eventually be able to download titles from the machines using memory cards.

The company’s stock rose 52 cents, or 5.6 percent, to $9.83 in late-morning trading, while Blockbuster slipped 2 cents, or 2.6 percent, to 74 cents. Coinstar rose 47 cents, or 2 percent, to $24.21.