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Blockbuster to Customers: Get off the Couch!

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Movie rental company banks on kiosks rather than on-demand or mail-in services.

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As if keeping your job in this recession wasn't hard enough, now we have to compete with robots.

Blockbuster (BBI), employer of countless high-school students and hard-up film aficionados, said it will have 10,000 DVD rental kiosks in its stores by the end of 2010. The kiosks -- the kind often found in supermarkets -- effectively replace the need for an actual human behind the counter, and offer a more welcoming customer service experience due to their inherent inability to pass judgment on your having rented Home Alone 2 twice in the last month.

The expected addition of the kiosks comes on the heels of Blockbuster's acquisition by partner NCR (NCR) of TNR Entertainment. According to Barron's, TNR "operates about 2,200 kiosks in supermarkets under the MovieCube and New Release brands."

But not everyone is convinced that the kiosks will do much good for Blockbuster's bottom line. Ryan Matthews, of Black Monk Consulting, points out that: "Blockbuster stumbled because the notion of physical access became less important in the video-rental business. Does creating another physical solution change all that? I don't think so."

Matthews is referring to Blockbuster's continued battle with video-rental services like Netflix (NFLX), and Apple's (AAPL) iTunes stores - 2 services that don't require customers to physically move from their couches to pick up their movies. Eliminating the need to move seems to be working. Netflix stock has risen 50% in the last year, with shares closing Wednesday at $45.88.

The same day, Blockbuster shares closed at $0.70.
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No positions in stocks mentioned.

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