Exclusive NCR Interview

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We spoke to Alex Camara, NCR Entertainment Solutions.
 
Alex Camara is Vice President and General Manager of NCR Entertainment Solutions. He has over 25 years’ experience in the self-service industry, including a decade spent as VP and GM at Coinstar, and as head of its coin and entertainment business. Earlier in his career, Camara was responsible for retail innovation concepts at Sainsbury’s supermarkets.
 
KE: What’s so exciting about self-service solutions in the entertainment industry at this time, and what is NCR’s role within the sector?
 
AC: Self-service in the entertainment industry is all about putting convenience, value, choice and fun back into entertainment. NCR is able to use the know-how and expertise which we have gained in other industries like retail, banking, travel and healthcare to deliver self-service technology to the entertainment industry.

Self-service is proving successful in this industry because consumers are looking for more entertainment media in different formats. This evolution means that entertainment brands and retailers have to rethink and re-engineer the way they interact with their customers. Self-service in the entertainment industry, such as DVD-rental kiosks, can drive up revenues from existing customers in-store as well as attract new shoppers.
 
KE: What range of solutions do you offer for the entertainment industry?
 
AC: Our solutions enable consumers to rent a wide range of good value movies from convenience locations using a credit card with no need to takeout a subscription or membership to a rental service. We also now have an outdoor version of the kiosk to enable 24/7 retailing.
 
We are working on the addition of game rental, music and other entertainment offers to add to our entertainment kiosks.We’ll also be able to offer download movies from kiosks to portable memory cards that can be used to play content on TVs, computers and mobile devices – we’re currently working on a trial of this in the US.
 
KE: What success have your solutions achieved in the US so far?
AC: We have had huge successes with our DVD rental kiosks in the US. The feedback from consumers has been very positive – they appreciate the wide selection of titles, the ease and speed of the transaction and the time saving aspect of being able to pick up their movies while shopping.
 
Our retailer partners appreciate our ability to deliver units quickly and maintain high levels of availability through our service infrastructure. We’re already ahead of our schedule to reach our deployment goals and attract new retail partners in more locations. By the end of 2009, we should have more than 2,500 Blockbuster Express kiosks installed in North America. By the end of 2010, we aim to have 10,000 installed.
 
KE: Do you envisage a similar takeoff in Europe?
 
AC: Beyond the US and Japanese markets, we are initially targeting the UK and will expand to other areas of Western Europe and Asia in the future. Japan and the UK are the world’s second and third largest movie markets respectively, so there is a lot to play for.
 
The US movie rental market is about an $8bn industry; kiosks are expected to account for 30% of DVD rentals by 2010 according to the research group NPD, up from 14% today. The UK movie market is big too – combined rental and sales brought in £2.56 billion of revenues in 2008. Around 79 million DVDs were rented in the UK that year. With the greater convenience, accessibility and visibility of kiosks we believe this will grow significantly.
 
KE: What makes NCR’s solutions different to others?
 
AC: We believe we are very well-placed to execute our strategy because of our competitive strengths that include a clear technology roadmap. We have the capability to extend rentals to other media and also incorporate digital download of content. NCR has a good global services infrastructure and strong retailer relationships. We have a lot of experience in driving positive consumer adoption of self-service. Our kiosks also have double the capacity of titles at our kiosks compared to our competitors.
 
KE: Why do you think DVD rental kiosks have gone down so well with consumers?
 
AC: Consumers say they like the convenience, the value, wide selection of titles and usability of these kiosks. Furthermore, the credit crunch has re-focused consumers on ‘at-home’ entertainment.
 
KE: Once the economy has recovered will DVD rental kiosks remain popular?
 
AC: Yes, because kiosks are very visible and accessible to consumers, more than any other channel. The technology to replace packaged media isn’t ready yet. The experience consumers get from a DVD still dwarfs downloadable content, which makes a physical disc – both DVD and Blu-ray – the medium of choice for most consumers. NCR is also working on a number of new technologies that will help us merge the digital download space.
 
KE: So you don’t see the digital download market as a potential threat to physical media?
 
AC: No-one thinks discs will disappear overnight. Physical discs will continue to be popular for the next five to seven years, especially with the advent of Blu-ray. The future of entertainment is in the ubiquity of content – being able to play media on a wide variety of devices and being able to purchase it in a wide variety of locations.
 
Digital content is not only the future, it is here today. We’ve begun testing our digital download kiosks in the U.S. at Blockbuster and Hollywood Video stores and we have enabled our new outdoor DVD kiosks as “digital download-ready”. When the time comes, we’ll be able to quickly and efficiently upgrade these machines to digital formats.
 
KE: What does the overall market for DVD rentals look like at the moment?
 
AC: Online movie rentals with postal fulfilment now accounts for 49% of DVD rentals in the UK - up by nearly a fifth over the last year. We believe kiosks will steal this market share as they are more immediate and visible when placed in store locations, especially since DVD rentals are an impulse decision for the vast majority of consumers. In the UK, Blu-ray rentals will be crucial to growth because of the high cost of purchase in comparison to rental, and the demand for a richer, cinema experience at home.
 
KE: In the US, DVD rental kiosks have been most popular in grocery and convenience stores. Where do you anticipate will be the best locations in the UK?
 
AC: Various reports have stated that the marketplace for DVD rental kiosks could be as high as 80,000 kiosks in the U.S. alone. This leaves a lot of room for growth in a number of channels. We believe that any high-traffic, repeat-visit location is a candidate for DVD kiosks. In the UK, we see particular potential in supermarkets, train stations and petrol forecourts.
 
KE: How do you drive usage of the kiosks?
 
AC: It is important to have high visibility signage on the kiosks, including digital screens running movie or games trailers. Retail staff in-store also play a key role in making consumers aware of the solutions and encouraging them to try them. Price promotions are also an important part of the marketing mix. Pitching rentals at the right price point will help encourage people to give the service a go and keep coming back for more.
 
KE: Do you think UK consumers will take to the entertainment kiosks readily?
 
AC: Britons already show a high preference for using self-service technology. Some UK supermarkets have around half of their transactions through self-checkouts. The UK also has more ATMs per capita than any other country in Europe. Healthcare providers, such as King’s College Hospital in London, are also starting to deploy patient automated arrivals kiosks.
 
KE: How is NCR going to ensure success in the entertainment sector?
 
AC: NCR’s DNA is in the self-service space. NCR serves consumers around the world through self-service devices such as mobile, online and kiosk channels. In 2009, we invested $60M in 2009 alone to build out entertainment business. We believe we will be the global leader in self-service entertainment, creating another exciting chapter in the 125-year history of our company.