Article

McDonald's puts media-burning kiosk program on the back burner

While the fast-food giant enjoys success with its DVD-rental kiosk, its Blaze Net program hasn't fared as well. What happened to this futuristic vision of the golden arches - and why is its European counterpart succeeding?

February 5, 2006

They're lovin' it in Munich, but not so much in Oak Brook, Ill.

McDonald's introduced its MP3 download kiosk to the United States at its new flagship Oak Brook restaurant in May 2005. Over the years, McDonald's has test marketed many media sales projects, including pay-to-play Wi-Fi Internet access and its current Redbox DVD rental kiosks.

McDonald's incorporated the visions of late chief executives Jim Cantalupo and Charlie Bell into the super-sized 10,000 square foot restaurant. It includes a café, healthy fresh menu items, wireless Internet, outdoor dining and plasma screen TVs. It is youthful, upscale and sophisticated - just like the customers Cantalupo and Bell courted to pull McDonald's out of the red in 2003.

Blaze Net, a flashy system of media-downloading kiosks, attracted the attention of newspaper photographers and technology columnists alike. McDonald's rolled out a similar system in Germany in 2004 called E2Go. The kiosk linked four user stations to two production centers. Customers downloaded MP3s and ring tones, burned CDs, printed digital photos and surfed the Web.

Jonathon First, chief operating officer for Digital Transaction Machines, which built the media kiosks, originally told the Chicago Tribune the 60 to 90 day test marketing phase would preface a deployment in the southeast U.S.

"We provide digital merchandise, whether it's music on CDs that can be delivered in under two minutes, photos in six seconds a piece produced professionally, or ringtones that're instant," First told the Tribune. "We also have the capability for ticketing, whether it's live events or movies, and eventually we are going to have DVDs and videos as well."

... and then the music stopped

That vision of Blaze Net's future never materialized. McDonald's ceased the state-side testing in December `05 with little explanation.

McDonald's spokesperson Lisa Howard said Blaze Net received positive feedback from customers but would be put "on the back burner." She reiterated that it was a test market project, like many others that McDonald's frequently launches and didn't discount a similar project in the future.

McDonald's left the exact reasons for Blaze Net's cancellation up to speculation. Some industry watchers blamed the stoppage on iPod's widespread popularity and Blaze Net's inability to download MP3s directly onto one, or to transmit data directly onto another MP3 player or PDA. DTM vice president of marketing Squire Velves said there was no Bluetooth downloading due to security concerns.

Others said a fast food restaurant was the wrong venue for music downloading and photo printing. Jokes about "Would you like fries and a photo print with that?" cropped up on blogs and Web forums.

Across the pond, the band played on

In Germany, McDonald's and DTM continue deploying 1,250 E2Go systems.

Customers line up to pay 1€ per song ($0.83) and .60€ to burn the latest pop hits from Australia and Switzerland, which frequently top Germany's MP3 download charts. Commerce journal "International Contact" studied the system, finding users downloaded 18,000 songs in the first three months of operation with zero advertising support. Customers simply showed up and used it - a lot.

The E2Go is built into the wall, as opposed to Blaze Net, in which units were free standing. DTM designed E2Go user stations to catch customers' attention while still blending it fluidly into McDonald's typical décor. Also unlike in America, the kiosks were not alone in the market, but part of a growing trend in other restaurants.

Colvmna Media CEO Imre Kovats knows that trend well and he's banking on it. His young company deployed a hundred media download kiosks, in Spanish fast food restaurants, as well as venues in Germany. The system, called Fifth Generation Media, focuses on areas of interest to tech-savvy users under 35: quick service restaurants, toy stores and cineplexes. It also incorporates a secured Bluetooth download system.

He predicts U.S. demand for kiosk-based MP3 downloads following consumer adaptation to the new technology.

"I just believe that the U.S. market, their readiness, is on a level that was in Europe a year and a half or two years ago," Kovats said. "This isn't a deficiency in the U.S. market. It will come."

Blazing back

By all assessments, there's a strong chance Blaze Net will return to McDonald's front burner, but with a new name and refocused approach to the market. Velves said DTM works with McDonald's to identify locations where they can achieve the successful integrated approach used in Germany. Meanwhile, DTM is deploying Blaze Net with a new name, eGo, in 7-Eleven stores.

More research on these key terms: QSR Photo kiosks Burning

Velves said the only current difference between the new system and the old is eGo's marketing, redesigned to appeal to customers' individuality. DTM is already gearing up an eGo account at networking website Myspace to help rope in that same young, progressive audience with the kind of word-of-mouth marketing that propelled its German cousin.

McDonald's, meanwhile, continues to invest in on-site media sales. It recently bought Redbox, a chain of DVD rental and sales kiosks, that have been deployed in several McDonald's stores. They are now testing Redbox in drive-thru lanes.

And while detractors joke about fries and photo prints, the picture is clear: The new media are finding a new sales venue.

"The future of the media download kiosk in the U.S. will be huge," Velves said. "Music companies, wireless providers, film studios, video game and photo companies all want alternative distribution channels. The demand for our product is growing every day."