moviebank

Issue #44

Last Update March 2, 2006

Business and Finance MovieBankUSA, A New Video Store Model by David Katz April 18,2005 Two models of DVD distribution have been competing for our video rental business. One models is represented by video stores like Blockbuster or those contained within giant retailers such as Walmart. The other model is the on-line ordering, DVD through the mail operation made popular by Netflicks and others. A third model has now joined the other two: a fully automated video rental facility with on-line reservation service, but local pickup and return. MovieBankUSA has entered the American market with freestanding, completely automated movie rental stores, supplemented by automated kiosks at many Duane Reade drugstores.

Traditional video stores have several disadvantages: they are only open certain hours, there is no way to tell in advance if a particular movie is in stock, and they charge late fees. On-line video stores have other disadvantages: there is a lead time for shipping between ordering and receiving a movie, or between returning a movie and being able to order a new one, and you may receive a second or third choice movie if the one you really want is unavailable. In addition, on-line movie services charge a monthly fee and restrict the number of videos you can have out at a given time. MovieBankUSA attempts to do away with all of these disadvantages.

With a free membership, you can go on-line, select a MovieBankUSA store or kiosk near you, and browse through the movies available at that site. If you want, you can reserve a movie at that time, which locks it in for you for three hours. You then go to the store or kiosk, insert your membership card, credit card or debit card, like you would in an ATM, and receive your movie. (Keyboards and screens are available at the physical location for title browsing and viewing of movie trailers if you don't have a membership or want to do your selecting on-site.) The stores are open 24 hours a day. Returning a movie is simple: you go to the store, insert your card, and slip the movie into the slot. It is at that time that you are charged for your rental. The experience is similar to using an ATM, and just as easy. Video games are also available for rental.

Movies cost members 99 cents for six hours, or $2.50 for 24 hours. For each additional day, the member is charged 99 cents. Non-members pay slightly higher prices. By completely automating the process, MovieBankUSA hopes to eliminate unpleasant surprises such as high rental prices, long checkout lines, wasted visits due to movie unavailability, or forced second or third choices. Each kiosk stores hundreds of movies; a MovieBankUSA store will have a selection comparable to that of the average traditional video store.

Duane Reade expects to initially install MovieBankUSA kiosks in approximately 30 stores in the New York area. MovieBankUSA's first wholly owned store opened at the corner of Broadway and West Houston Street at the border of SoHo and the Village. Plans are to have over 1,000 stores and Duane Reade kiosks within three years. An Italian company, Video Systems Italia, supplier of the automated kiosks, has been operating in Europe since the early 1990's, with the bulk of its installations in France and Italy.

For more information, go to MovieBankUSA's website, www.moviebankusa.com .