Walgreens plans to add kiosks that make DVDs of popular movies next year, using a new system designed to increase selection while avoiding piracy.Recent changes in copy-protection rules governing DVDs have freed retailers to tap this new movie market by letting consumers burn digital copies onto blank discs at stores, industry watchers said.
For movie studios, the kiosks add to revenue, particularly from older and more niche content selections, without having to manufacture, ship and store the DVDs.
"We hope to launch DVD-burning kiosks in the next few months," a Walgreens representative said.
Last month, the DVD Copy Control Association, a group of movie studios and hardware makers that oversees the copy protection system for DVDs known as Content Scramble System (CSS), moved to allow its technology to be licensed more broadly, opening the door for DVD-burning kiosks.
Now Walgreens, the nation's largest drugstore chain with more than 6,000 stores, is working with Hollywood studios. Consumers will be able to make DVDs in about 15 minutes.
"We believe it could right for most stores," the Walgreens representative said.
Walgreens and other retailers are working with Sonic Solutions, which released software based on the recently approved industry specifications last month.
Sonic said consumers or retailers need special DVD burners and recordable discs to use its Qflix software, which also paves the way for download services from companies such as Amazon.com, Wal-Mart Stores and Blockbuster's Movielink.
These services and Apple's iTunes now mostly let people watch films on computers or devices such as iPods.
"The burning capability is a perfect complement to our Movielink download business, because it will eventually enable consumers to store movies on their hard drives or DVDs for future usage," said Blockbuster spokesman Randy Hargrove.
He said Blockbuster will examine kiosks. "If it makes sense to get into kiosks, it's clearly something we could do," he said.
Sonic has licensed its Qflix software to kiosk companies such as Polar Frog Digital, which licenses films and television shows from studios.
"We're in negotiations for content from all the studios to provide DVD-on-demand at retail. The last hurdle is deciding which content to license without upsetting existing retail partners," Polar Frog Chief Executive Todd Rosenbaum said.
Studios initially will probably use the kiosks more to give older films a "longer tail" of availability, rather than offering new movies, for fear of upsetting existing retail partners and cannibalizing sales, said Kurt Scherf, principal analyst with Parks Associates.
Rosenbaum added that the studios are not likely to discount the DVDs.
Scherf has projected on-demand DVDs will generate $1.3 billion in revenue by 2011. Studios generate about $24 billion a year from DVD sales and rentals.
