PHYSICAL: Minimum investment for machines about $20,000

2009-09-04

 

 

Seeking to grab the interest of laid-off executives and others looking for relatively simple business opportunities in these tough economic times, DVDNow is running a radio ad campaign in some markets aimed at getting entrepreneurs to become owner-operators. The company is looking for people to buy DVDNow kiosks and get them placed in their local area. Minimum investment is about $20,000.

“We analyze markets within the U.S. and Canada to determine their suitability for expansion,” DVDNow CEO Scott McInnes said.

Although he wouldn’t say specifically which markets the company is targeting, he said the criteria include “the availability of high-quality location opportunities, number of rental kiosks currently in the market, and how many DVDNow owners we already have in the area”—in other words, areas where Redbox and other kiosks haven’t made much of a dent yet.

So far, McInnes said, most DVDNow owner-operators have come from kiosk-related businesses: ATM operators and traditional vending machines.

“We do have a number of kiosk owners that have experience as a video retailer, but the majority is new to the video business,” he said.

Although supermarkets might be the most common location for a kiosk, some DVDNow kiosks have been placed in video stores, McInnes said, but declined to give names of the retailers.

Although McInnes didn’t give a figure for how many locations carry his company’s kiosks, “We expect to be in 3,000 to 5,000 locations within the next 24 months,” he said.

DVDNow sees its strength in “helping entrepreneurs start and grow self-service businesses,” McInnes said.

The company considered operating the kiosks on their own as well, but decided against it because it didn’t want to appear to have a conflict of interest with its kiosk owners, he said.

McInnes described DVDNow as a good business for first-time entrepreneurs.

“We assist with all the aspects of starting a business, including finding locations, setting up merchant accounts and where to purchase DVDs,” he said.

He downplayed the controversy over some studios wanting a four-week window before Redbox and other kiosk companies can get new releases.

“We are watching what is going on with great interest but really don’t see this having any great impact on our kiosk owners,” he said.