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Like Coke machine for DVDsMcDonald's start-up Redbox tests video vending equipment
By Hiawatha Bray, Boston Globe Staff | August 2, 2005
GLASTONBURY, Conn. -- Candy, soda, cigarettes. Now DVDs.
At a Stop & Shop supermarket here, one of 550 test sites around the country, customers can get DVDs of the most popular movies -- from Clint Eastwood's hit ''Million Dollar Baby" to ''National Treasure" with Nicolas Cage -- from a pair of cylinder-shaped vending machines at the front of the store.
The machines belong to Redbox, a company launched by McDonald's Corp. that executives hope could change the video rental industry almost as much as the Golden Arches changed Americans' eating habits.
For storefront video rental companies like giant Blockbuster Inc., Redbox is the latest competitive headache spawned by the decline of bulky videotape cassettes and the rise of lightweight DVDs. The success of the unheralded start-up Netflix Inc. showed that consumers would rent movies on the Internet and have them delivered by mail. Now Redbox, based in Oak Brook, Ill., will challenge video rental stores by making the process as simple and as cheap as using a Coke machine.
''It's really being seen as another way to make McDonald's convenient and relevant to customers," said Greg Waring, Redbox senior director of marketing.
Redbox charges a dollar a day, plus local sales tax. In Connecticut, it comes to $1.06. There's no need to fill out a registration form before renting. All the user needs is a valid credit card. A renter swipes the card and picks the movie using a touch-screen video monitor. The DVD emerges from a slot, packed in a plastic case.
''We love it," said Rachel Zarrilli, 36, who shops with two young children in tow at the Glastonbury Stop & Shop. Zarrilli dreads visiting the local video rental store with her children. ''They run around, they go crazy," she said. ''And it's $5 to rent a movie."
Redbox charges no late fees. Instead, the customer is charged another dollar every day the movie is out. After 25 days and $25, the renter can keep the disk. To return the movie, people needn't go back to the original location. Redbox disks can be returned at any Redbox in the United States. All of the machines are connected to Redbox headquarters through a broadband digital network, so the company always knows which movies are most popular and which machines need servicing.
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Unless the distribution machines can check for defects and scratches in the discs there are a world of problems awaiting them. Let's assume that the machine re-rents discs after return. Without qualified personell on hand to inspect the returns the next sucker will get a movie which either won't play or will only partially play. This is frustrating ebough when it happens with a Blockbuster rental, but at least they have personell available to refund your money or provide a replacement disc at no additional charge. Can you imagine what it would be like renting a defective disc from a machine.Then there's always the ratings issue. An underage kid could potentially "borrow" a parent's VISA card and if they know the security code then rent anything they want with no supervision. Unless Redbox has resolved these issues it would seem that the best system is still having responsible clerks available to inspect discs and IDs for film rentals.
...a DVD vending machine across from the check-out counters which has been there for a couple of months. It has about 6 or 8 of the latest current releases and charges less than $2. So far, I haven't seen anybody use it.Blockbuster's and Netflix' days are surely numbered. But I predict it will be a more sophisticated in-home pay-per-view-on-demand that does it (stop the action to go to the bathroom or refrigerator and nothing to return).
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