NCR makes Fox its second rev-share studio

By
Michael Arrington

Robert Marich

November 24, 2010

Fox has become the second studio to enter into a direct supply agreement with NCR to supply discs for its Blockbuster Express-branded video rental kiosks. NCR, which already has a similar arrangement with Universal, said both deals include revenue sharing, a 28-day kiosk window for new releases at standard $1/night pricing and selective tests of new releases with no window at premium pricing. The first such title from Fox will be Knight and Day, which will be available to rent from NCR kiosks day and date with its 30 November retail release at a likely cost of $3 for the first night on DVD, reverting to $1 thereafter.

Regardless of test results, titles from both Fox and Universal will be available in revenue-sharing quantities 28 days later at $1 per night. NCR claims to be negotiating revenue sharing deals with all the major studios encompassing not only physical rental and but also physical retail and digital delivery.

The company has also stated that expanding its presence in Canada is 'a priority'. NCR acquired 200 kiosks in Canada as part of DVDPlay and now plans to roll out Blockbuster Express kiosks in the market.

Direct supply deals between studios and kiosk operators have been a win-win arrangement so far. Kiosk companies no longer have to buy new titles at retail, a time consuming process that left them with excess discs after the initial burst of rental activity. Meanwhile studios can protect their retail business; as well as the option of a 28-day window, terms usually include the destruction of discs to preven 'previously-viewed' sales. NCR's larger competitor, Coinstar's Redbox, recently reported an upturn in earnings for its third quarter that was achieved with revenue-sharing studio deals, reversing an earlier profit hiccup in the transition to 28-day windows. We believe that Redbox, NCR and regional vendors have covered approximately two-thirds of the total available market for video rental kiosks in the US. As kiosk deployment slows, revenue growth will come from Blu-ray rentals, premium pricing (eg, on no-window new releases), retail disc sales and other self-service entertainment options, such as rentals and sales via digital storage devices or online.

Tags:

Countries: USA
Companies: NCR Blockbuster Fox Redbox