The Video Business

Videotape rentals began in stores that marketed nothing else, then spread to convenience stores and supermarkets as some consumers sought the ease of one-stop shopping close to home. The next trend, experts say, lies in videotape dispensing machines, or VDMs.

Resembling a cross between a juke box and a soda vending machine, each VDM carries between 100 and 600 titles and costs between $12,000 and $20,000. Each machine includes a tiny computer to manage inventory, while large numbers of VDMs scattered in many locations can be monitored from a central host computer.

Fewer than 1,000 have been manufactured so far, said Jim Lahm, a video retailing consultant in Fullerton. But with 35 companies selling or developing models, including Canton, Ohio-based automated teller machine manufacturer Diebold, the machines should soon proliferate. “In five years, you’ll see 50,000 to 100,000 of these machines across the country,” Lahm predicted.

VDMs have already appeared in offices, hotels and even video stores.

Video stores rotate their inventories through VDMs at outlying locations and in their own foyers, open 24 hours a day. On-site machines allow stores to serve more customers at peak hours and close cash registers earlier. “It can be used by the video stores like an express lane, as it were,” said Allan Schlosser, a spokesman for the Electronic Industries Assn.