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Issue Date: Vol. 49, No.5, May 2009, Posted On: 4/29/2009

NCR Posts Q1 Loss; Buys TNR To Advance Blockbuster Self-Service DVD Rental Alliance

Nick Montano
Self-Service, Automatic Retailing, Automated Technology, NCR, TNR, Blockbuster, Redbox, DVDPlay, Vending, Vending Machine, DVD Rental Machines, Kiosk, Movie Rentals, Videogame Rentals, Bill Nuti, John Bruno

DAYTON, OH -- NCR Corp. reported an operating loss of $15 million for this year's first quarter, ended March 31, compared with profits of $49 million during the same period of 2008. The company, a leading developer of ATMs and self-service terminals, said first-quarter revenue was $1.01 billion, down 15%.

"NCR is managing through this global economic downturn by executing consistently on our strategy, accelerating our multiyear cost structure improvement plan and pressing our competitive advantages in the global marketplace," said chairman and chief executive officer Bill Nuti. He added that NCR is offsetting losses by reducing operating expenses and exploring new investment initiatives.

One area NCR remains optimistic about is the emerging self-service entertainment media business. In mid-April, the company acquired TNR Holdings Corp., which operates some 2,200 DVD rental kiosks under the MovieCube and The New Release brands, for an undisclosed sum. The acquisition is expected to advance NCR's and Blockbuster's effort to bring roughly 10,000 Blockbuster Express DVD kiosks to market this year.

Competitors include Redbox, now fully owned by Coinstar and the market leader with an installed base of 12,000-plus kiosks, and DVDPlay of Campbell, CA, which developed the Automated Entertainment Machine in 1999; TRN was the No. 2 operator. NCR and Blockbuster began a pilot program last fall for its automated service.

NCR had been a minority investor in TNR since mid-2008, when TNR named the Dayton, OH, company its exclusive provider of self-service technology. Last August, Blockbuster announced a partnership with NCR to bring more than 10,000 DVD kiosks to market by the end of 2009. See story here.

The acquisition is part of the NCR SelfServ Entertainment initiative, which aims to provide consumers with self-service solutions for buying and renting movies, music and videogames. Analysts believe self-service transactions through entertainment kiosks can reach $1 billion by the end of 2010, and NCR projects its venture could be profitable within three years. It's investing $60 million this year and plans to build 30,000 rental machines over the next several years.

"This acquisition is a major step forward in NCR's strategy of becoming the leading provider of self-service entertainment solutions and will deliver the best and broadest media offerings to our customers through our partnership with Blockbuster," said executive vice-president John Bruno.

And as the DVD rental marketplace accelerates its shift to self-service platforms, the partnership may offer salvation for Blockbuster, which has been struggling with massive debt in recent years.

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