CEO Jim Keyes [indicated that]Our take:“The important thing about NCR as our partner is instead of going out and partnering with Redbox or somebody else, we picked a technology partner so that when we deploy a vending machine, it’s a vending machine that turns into a digital download kiosk.”According to Keyes, the kiosks have a server built into them so customers can choose between getting a physical DVD or a digital download. This physical-to-digital transition is one we encouraged Blockbuster to make a while back, but the company’s digital download options only work with Archos right now, which is severely limiting in this iPod nation of ours.
Blockbuster is in a difficult position right now. Their market share continues to be eroded by Redbox kiosks, Netflix's mail-based distribution, and the newcomer, streaming video over the Internet. For all that, though, they still have a very strong brand that's practically synonymous with video rental, even with younger Millenials. So Keys is walking a fine line. While their kiosk strategy is interesting -- it gets people into the store but gives them access to a vast library in digital or physical form -- we're not convinced that it will be convenient enough to beat streaming, or big enough to beat Netflix. But the notion of "waiting for the dust to settle" in the set-top box market is a sound one. There are plenty of start-up and established companies vying for a piece of the living room right now, and most of them will fail in a few short years. Once a clear winner emerges, Blockbuster can use its considerable brand cache to stake a claim against the winner.
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