Bloomberg News

NCR Blockbuster Express Raises Prices to Follow Redbox, Netflix

November 07, 2011

Nov. 4 (Bloomberg) -- NCR Corp.’s Blockbuster Express, the second-largest operator of DVD-rental kiosks, will double the price of some movies to $2, following similar steps by rivals Redbox and Netflix Inc.

The price applies to the first night’s rental of newer releases that have been in kiosks for 29 days to 90 days, NCR Entertainment General Manager Justin Hotard said in an interview yesterday. Shoppers who keep DVDs longer will pay an additional $1 a day. The change is effective Nov. 8.

More than 70 percent of a kiosk’s titles will remain at the lowest $1-a-day price, Hotard said. Netflix and Coinstar Inc.- owned Redbox have already raised prices to reflect rising costs. Hotard said some studios will receive a share of the $2 rentals, revenue that will help Hollywood counter an industrywide decline in DVD sales.

“There are a lot of players in the industry who have reset their pricing in the last couple of months,” Hotard said. “It’s all because of the same reason. One, we feel like it’s more in line with the value of the content, and the other is, there are higher operating costs.”

Blockbuster Express charges $3 for the first day’s rental of new releases that have been out less than four weeks, again with customers paying $1 a day extra if they keep DVDs longer.

The new prices come with guaranteed availability, Hotard said. If a film isn’t in stock, the customer will get a $1 discount on any other $3 or $2 title in the kiosk. The company operates more than 10,000 dispensers.

Redbox, Netflix

NCR, the Duluth, Georgia-based maker of automated-teller and store-checkout machines, rose 4.5 percent to $19.46 yesterday in New York. The shares have gained 27 percent this year. Coinstar, based in Bellevue, Washington, added 3.4 percent to $48.33. Netflix, the Los Gatos, California-based streaming and DVD-by-mail service, climbed 11 percent to $92.29.

Redbox raised its price to $1.20 from $1, effective Oct. 31, citing new debit-card fees that increased costs. Netflix uncoupled its online and mail-order services, raising the price for those who use both by 60 percent to $15.98 a month.

Blockbuster Express has been pricing DVDs differently than Redbox for the past four months by offering some new releases for $2.99 the day they go on sale in stores.

The higher price has enabled Blockbuster Express to avoid a 28-day delay in the availability of many titles that three studios, Warner Bros., Universal Pictures and Twentieth Century Fox, impose on Redbox and Netflix.

The success of the higher price for new releases factored into the decision to create the new structure, Hotard said.

“The principles of demand hold true at these price points,” Hotard said. “If a title does well at $1, it will do well at $2 and $3.”

NCR licenses the Blockbuster name from Dish Network Corp.’s Blockbuster movie rental stores.

--Editors: Rob Golum, John Lear

To contact the reporter on this story: Michael White in Los Angeles at mwhite8@bloomberg.net

To contact the editor responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net


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