McDonald's wades deeper into DVDs
By Bruce Horovitz, USA TODAY


Blockbuster has a very big-footed rival about to stomp on its turf: Ronald McDonald. McDonald's (MCD) on Monday will announce plans to begin testing DVD rental kiosks at all 105 Denver stores.

Smaller tests around Washington and Las Vegas had a huge response.

If the summerlong Denver test is a hit, McDonald's hopes to become the first fast-food chain to rent top DVDs nationally.

DVDs will be rented at Redbox kiosks, situated inside and outside restaurants. Rental fee: $1 a day — and they can be returned to any McDonald's. At Blockbuster (BBI), DVDs cost $3.99 for three days and must be returned to the same store. The McDonald's kiosks will stock the same top 30 DVD titles as video stores. The top 30 account for about 80% of DVD rentals.

The move could shake up both the $25 billion DVD business and the $105 billion fast-food industry. Over time, it could further blur consumer distinction among the convenience store, the fast-food joint, the gas station and the DVD rental shop.

Convenience continues to be the dominant marketing strategy of many of the USA's biggest retailers. About 29 million dual-income families have little free time to make extra stops for food and entertainment.

It's tough to top Mickey D's for convenience. While there are upwards of 30,000 McDonald's restaurants globally, there are about 8,900 Blockbuster stores.

Blockbuster officials declined to comment.

McDonald's isn't trying to put Blockbuster out of business. But it is trying to be more contemporary — and to lure more business during slow dinner hours.

"We are doing everything we can to be more relevant with everyday consumers," says Mats Lederhausen, managing director of McDonald's Ventures.

It's a very crafty — if not sensory — move for McDonald's, says Valerie Folkes, chairman of the marketing department at the University of Southern California. "They just want people to get inside, where they're subjected to the smell of those french fries. It's going to sell more food."

That is all McDonald's wants. Lederhausen says he doesn't expect to make money from DVD rentals.

DVDPlay, which makes the machines, says it can supply a national rollout. The kiosks also are being tested in some Albertsons supermarkets in Salt Lake City, says Dee Cravens, marketing chief.

McDonald's has long declined to share real estate with other businesses. This forces it to learn a new business. "It could blur the brand image," Folkes says.

But it poses far more trouble for Blockbuster, whose parent, Viacom, has plans to spin it off.

How to compete with McDonald's — besides on DVD selection? "Well," Folkes says, "I don't think you'll see Blockbuster selling burgers anytime soon."


http://www.usatoday.com/money/indust...23-mcdvd_x.htm

This can't end well. I can't imagine how many McDonalds you would have to make work together on this before the whole system is screwed up. How many late fee's will be simply because someone dropped it off at a mcdonalds that isnt part of the plan.

It could end well for consumers. Have you ever ordered a burger and asked for "no onions"? But then they give you onions anyway? The same thing could happen with dvds.

"No dvds, please". Then they will give you free dvds.

Just what I always wanted, full frame movies with greasy fingerprints all over the disks.

they've been renting them over here in the washington dc area for a little over a year now. they were selling laundry detergent and milk in these big ass red vendors as well, but that tanked so now they rent dvds at a few of them. mcdonalds still sucks.

I guess if you want a director's cut, you have to ask them to supersize it.

It's going to be a logistic nightmare for them when the majority of the DVDs all end up at a few best positioned locations, and the fringe locations have to keep making runs to pick up their movies.

I bet they are all going to be fullscreen

This will be a cash cow for them. People will probably buy food on pickup AND dropoff.

Most people are not very good at multi-tasking.

This is definitely a good idea for the lazy who want their fast food and movies at the same time. I can't blam McD for doing this though, it could work well for them.

Do you think when it's released on DVD, the documentary Super Size Me will be one of the selections?

They just built a new McDonalds/Blockbuster near me...

This sounds like the same kiosk that's in my grocery store. I've looked at it once or twice, since it's a decent price, but never saw anything I wanted. For what it's worth, I've never seen anyone else even look at the machine, let alone use it.

I can understand trying to get people exposed to the smell of the fries. Everytime I smell those on the subway or wherever, I just start craving those fries...

The 1st movie I'd be renting from them is 'good burger' of course

Sade

Well, that'll be the only good burger you'll be getting from McDonald's. . .

What about films the might feature characters eating at fast food restaurants other than McDonalds? If a movie has a scene set at a Burger King, will they still rent it out? How about Harold & Kumar go to White Castle?

I like this move. $1 a day in contrast to $3.50+ at my other video rental stores. Plus, the closest McDonald's to me is only about 4 blocks away while the closest "real" video rental store is 2 miles away.

Moreover, if this goes well, pressure will be on the studio to reduce prices. Aren't we all opposed to the current increasing price trend?

There's been one here in Vegas for a while I pass sometimes and it's pretty strange, I'm glad I know what the heck they're doing now. They have a *really* small selection and they're all new/newish releases that kinda... well, they're not the most sought after films. I never felt inclined to rent there but more power to the people who dig this idea.

Its a pretty good idea. As long as the disks stay clean and not get greasy. Going to a video store is inconvienent and out of the way for me, but there is a McDonalds close enough for me to walk to during lunch and a few on the way home. I still probably wouldn't rent movies but if I wanted to, McD's makes it easier.

Another side effect is there will be more used DVDs for sale. If they are going to carry the top 30, they will need to get rid of the older titles sooner than Blockbuster will.

Too bad. Every time a BBV closes, an angel gets his wings, as far as I'm concerned.

I hate McDonald's food. Everytime I eat it, I have to shi# 5 minutes later. I'll stick to Netflix.

This is a good setup for a ripoff. Just put the AOL discs in the DVD holder.

DVD for the drive-thru?

Now this is actually a good idea, and would warrant my participation.

A Drive-thru DVD rental joint, by itself, sounds like a great idea, let alone tied into a McDonalds.

"Number 3, supersized, with a Sprite, and Kill Bill V1 please."

I'm serious. With a drive-thru option, this is truly sounding like a good idea.

Hmmm...just something else to add that will lead to some ridiculous and outlandish lawsuit against them from the losers that dine on their food regularly.