With DVD kiosks leaving their infancy years and beginning to approach their toddler years, TNR Entertainment has found that managing this growth has become increasingly difficult. In an attempt to help position the company for more scalable growth in the future, TNR Entertainment has announced that they have hired IBM to support the company over the next several years.
With retail partners moving past the beta phase of DVD kiosks and into the deployment phase, TNR needed a solid backend system that could help them tie all of their machines together and IBM is a natural fit. The multi-million dollar contract will initially run for three years and will enable TNR to focus on aggressively developing their business without having to worry about the constraints that their growth might have to their infrastructure. In a press release announcing their implementation of IBM’s MySAP program, TNR gives some of their rationale behind wanting to outsource their backend software needs.
“At the beginning of the year, we realized that, with our major growth initiatives underway and the tremendous amount of data flow inherent in our business, our systems didn’t have the management tools we needed, now or for the future. IBM was able to quickly assess our needs, develop an IT infrastructure and manage it for us,” said Jay Whitney, vice president of operations for TNR Entertainment. “With the on demand hosting model, we can focus our efforts on expanding the business without having to invest in an entire IT infrastructure from the ground up.”
While taking care of these backend needs will undoubtably solve some of the major headaches that TNR Entertainment faces from a business perspective, from the press release it’s unclear if it solves two of the major pieces that the company is missing from a consumer perspective.
Currently TNR Entertainment lacks the ability for consumers to reserve DVDs via the web. TNR has acknownledged that they’ve been working on a solution to this problem and IBM may or may not be able to help with that process. One thing is clear though and that is without webervations, it will make managing upcoming burn on demand technology very difficult from a logistics perspective. While it’s still early in the DVD kiosk cycle to get too excited about burn on demand functionality, recent comments by Time Warner CEO Dick Parsons and an agreement by the DVD Forum to support this feature in 2007 indicate that the technology is well on it’s way towards being accepted by the major media players in the upcoming year. If IBM is able to assist in tying together the backend inventory with an online inventory that consumers could use, it would go a long way in improving the quality of service that TNR Entertainment is able to give their customers.
The second missing piece of the TNR consumer equation is their inability to accept returns at a different kiosk then the one you rent from. While I doubt that most people take heavy advantage of this feature, it’s certainly a nice bonus for those who are taking long road trips and want to swap DVDs or for those who have several different kiosks that they come across during their daily activities. While the press release does not explicity state that this functionality is coming, it’s reference to better inventory management makes me suspect that this could also be something the IBM may be able to assist TNR Entertainment in developing.
With TNR’s kiosks holding 200 titles and a total of 1,000 DVDs, managing inventory can be an especially crucial component of maintaining a consistent quality experience for their customers. While they want to maximize the turnover on their inventory, they also want to ensure that there will always be plenty of choices for customers when they rent from their kiosks.
Near my house there is a DVDplay kiosk located within a Safeway and the last time I counted there were only 68 films in their inventory and at least forty of them were sold out. While this is a small indication as to how successful these kiosks can be even at a $1.50 price point, it’s also a little dissappointing for someone who has gotten used to being able to browse through Netflix’s deep longtail archives for movies that appeal to my niche tastes.
Whether or not IBM’s software addresses either of these consumer issues for TNR certainly doesn’t negate the importance of this announcement. By outsourcing this functionality of their growth the company can concentrate on more important issues like securing distribution agreements and finding more capital to help them accellerate their growth. With VOD eventually set to replace the DVD, TNR Entertainment only has about a decade to establish their brand as a premium player if they want to make the jump to an all digital world. By leveraging IBM’s expertise, they’ve put themselves in a position to deploy their kiosks even more quickly and to manage their network of mini video stores regardless of how quickly or large it seems to grow.