Blockbuster tries out video rental kiosks

Blockbuster Inc. has begun testing movie rental kiosks at Papa John’s pizza outlets and Family Dollar stores. Movies at the kiosks will be available for $1, substantially less than the cost for rentals at regular Blockbuster stores.

The Blockbuster Express kiosks, which are about the size of a vending machine and hold 250 movies, are in three Papa John’s International Inc. locations and seven Family Dollar Stores Inc. outlets in the Lexington, Ky., area, said Karen Raskopf, a spokeswoman for Blockbuster.

The kiosks may help Blockbuster fend off DVDPlay Inc. and Redbox Automated Retail, jointly owned by McDonald’s Corp. and Coinstar Inc. The two companies have lured customers from Blockbuster and Movie Gallery Inc. movie rental stores by offering $1 DVD rentals at supermarkets, drugstores and McDonald’s restaurants.

“It’s a natural affinity,” Papa John’s Chief Executive Nigel Travis said. “You are seeing a consolidation of food and entertainment. It definitely drives traffic.”

Recently released DVDs typically rent for $4 for five days at a Blockbuster store. The $1 DVD rentals can be returned to any Blockbuster Express kiosk, not just the location where the movie was rented, Raskopf said.

Blockbuster also is testing kiosks in fast-food restaurants and other unspecified stores around the U.S., Raskopf said. Papa John’s, which will have three kiosks in rural towns in another state, said customers would be able to rent the movies when they pick up carryout orders. They can’t get the $1 rental when ordering pizza that will be delivered.

Shares of Dallas-based Blockbuster fell 11 cents Wednesday to $3.76.

Blockbuster is considering kiosks and vending machines where customers can rent movies or burn copies directly to a DVD, Chief Executive James Keyes has said.

“We think vending is probably the fastest-growing segment right now,” Keyes said in an interview this month. “The next bigger trend is for vending, and we are well positioned to be able to play through an electronic kiosk.”

Papa John’s, based in Louisville, Ky., has linked pizza with DVDs before, with promotions in the last two years with films such as “Spider-Man 3.” The chain wants to see if the kiosks help increase the number of customers, Travis said.

Blockbuster is seeking to boost in-store sales as the number of ways consumers can obtain movies has increased. Customers can rent DVDs online at Netflix Inc. and have them delivered by mail, download TV shows at Amazon.com Inc. or watch video-on-demand through their cable provider.