Blockbuster unveils in-store kiosk prototype

Blockbuster Inc. unveiled a prototype of an in-store kiosk for downloading movies at its annual meeting on Wednesday, part of its plan to transform into more than just a DVD rental chain.

Blockbuster's proposed takeover of electronics retailer Circuit City Stores Inc. for just over $1 billion was only mentioned briefly during the meeting. Chairman and Chief Executive Jim Keyes said the company is still in the due diligence stage of considering a possible acquisition. He did not disclose when a decision will be made.

Keyes said acquiring Circuit City would be an "accelerator" of the company's strategy to grow Blockbuster's core rental business and enhance its product offerings of movies, games and entertainment gadgets.

"With or without Circuit City's acquisition, we think we have a terrific opportunity to transform our stores," Keyes said.

Billionaire investor Carl Icahn, Blockbuster's largest shareholder, did not attend the morning meeting. To lift concerns about Blockbuster's ability to finance the deal, Icahn has said he is prepared to buy Circuit City if all else fails.

The sleek prototype kiosk unveiled Wednesday is just one way that Blockbuster is looking to deliver movies digitally. The design, which Keyes said is likely to change with testing, offers a range of features to help customers make movie choices, including previews and recommendations. Keyes said the company is working to reduce the download time for movies to about 30 seconds.

The company is also working on allowing customers to download movies through set-top boxes or Internet Protocol television, or IPTV.

The kiosk prototype, which will begin testing within the next three weeks, was developed by NCR Corp. For the pilot launch, the kiosks will be compatible with an Archos portable device, but the company ultimately plans for the kiosk to be an "open system" and widely compatible with a range of devices.

The CEO noted that Blockbuster plans to rely on third-party partners to minimize the company's investment in these initiatives.

Keyes also said the company is still exploring alternative, simplified pricing structures for its rental service.

Earlier this month, Blockbuster said it swung to a first-quarter profit and saw a 2.9 percent jump in U.S. same-store sales. Chief Financial Officer Tom Casey said the company has continued to see improved same-store sales performance in April and May.

Also Wednesday, Keyes said shareholders elected all the company's board nominees, based on a preliminary vote tally.

Blockbuster shares dipped 4 cents to $3.30.