NCR and Blockbuster Take Manhattan

Take that, Gotham!

NCR (NYSE: NCR  ) and Blockbuster (NYSE: BBI  ) are teaming up with the Duane Reade drugstore chain to have more than 200 DVD rental kiosks in New York City, with most of them being installed this month.

NCR's Blockbuster Express kiosks are clearly gunning for Coinstar's (Nasdaq: CSTR  ) Redbox, which is the leading maker of automated kiosks for film but has a surprising void in Manhattan. Even better for NCR is that its machines can hold more movies than Redbox can. It's also matching the Redbox daily rental rate of $1 per disc.

This isn't an easy race to handicap. NCR is bankrolling the rollout of the machines, so it's not going to burden Blockbuster's finances. We'll have to wait and see whether the value proposition of one-buck rentals will sting its in-store business.

It's clear that the public isn't valuing video entertainment the way it used to. DVD sales have been sluggish, and even Amazon.com (Nasdaq: AMZN  ) and Apple (Nasdaq: AAPL  ) have struggled to move digital celluloid.

Do we blame piracy? Do we blame Google's (Nasdaq: GOOG  ) YouTube for occupying our time with freebie clips? Do we blame Netflix (Nasdaq: NFLX  ) for introducing unlimited online streaming at no additional cost to subscribers? Do we blame the cable companies that continue to widen their content offerings to justify their higher subscriptions?

There's no single scapegoat here. Movie studios can't just blame $1 rentals for their DVD woes. If Blockbuster Express rentals wind up cannibalizing actual Blockbuster rentals, there are probably other factors feeding on those bones.

The filmed-entertainment industry is going through a lot changes these days. For now, at least, it means that even jaded New Yorkers may have a hard time resisting single-buck rentals.

Google is a Motley Fool Rule Breakers recommendation. Apple, Amazon.com, and Netflix are Motley Fool Stock Advisor selections. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz was an early Blockbuster subscriber, but he hasn't been inside a store in ages. He owns no shares in any of the stocks mentioned in this story, except for Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


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