Seattle-based MOD Systems began shipping its Consumer Kiosk to retailers in January. Dubbed “MOD POD,” the freestanding, turnkey, touch-screen kiosk allows customers to search, sample, purchase and download digital media quickly and easily.

Downloaded digital content can go onto a DVD or optical disk, USB drive, SB card — or directly to an MP3 player or cell phone. Users can even create cover artwork and take the whole package home — or opt to ship it to another location. What’s more, there’s a small capital commitment to inventory since “stock” is delivered digitally rather than from store shelves. And MOD POD can be deployed almost anywhere a retailer believes it has a media-consuming demographic and the traffic to support the expenditure.

Anthony Bay, MOD Systems’ executive chairman and co-founder, predicts a revolution in the merchandising and selling of music, games, feature films and TV shows. “Sampling and merchandising systems allowing customers to preview content have been around probably 15 years, and we had some heritage in building those,” he says. But those units “didn’t allow customers to buy” content.

Plenty of those sampling stations are still used in major book and record store chains, but Bay hopes to render them obsolete with his company’s new digital media platform. First, however, he wants to reassure retailers that, contrary to popular perception, not all entertainment is purchased online at home.

MOD POD “could be deployed by any retailer with a brand and a demographic they feel they can target well,” Bay says. Retailers use content like music, movies and games for a variety of purposes. “Some use it to increase basket size, others use it to drive store traffic,” he says. Think airports, coffee shops and convenience stores, and you get a sense of MOD POD’s penetration potential.

Business model
MOD POD offers something for traditional media merchants, as well. For chains like Best Buy and Circuit City, MOD POD offers a way to manage a virtual inventory of digital music and movies at both the corporate and store level: it enables retailers to augment physical in-store stock and, in turn, address out-of-stock issues, Bay says.

The MOD POD business model is based on fixed costs similar to rent and fixtures. Retailers “pay us a little bit a month to run it on a per-store basis,” Bay says, “but it’s relatively fixed” overall.

In addition to cost, kiosk downtime has also been a concern to retailers. That’s a big reason MOD POD was designed and engineered like an electronics product. “It just runs and runs without rebooting,” says Bay, who predicts consumer acceptance will closely mirror the initial acceptance — and subsequent proliferation — of ATMs.

He points to Redbox, the video rental vending machine concept currently popping up in supermarkets, drug stores and fast-food restaurants across the country, as a “great first step because it gets people used to interacting with a screen [in a store] to get a DVD.”

The downside, he says, “is the limited physical inventory because it’s subject to what can fit on the backside of that machine.” With MOD POD, “there is no inventory and retailers aren’t invoiced until the end of the month in which the sale is made.”