Electronic Data Systems Corp. is exploring whether consumers will watch commercials while using automated teller machines.
In a pilot that began last month at 165 machines in San Diego 7-Eleven stores, EDS is showing 15-second previews from Fox Searchlight Pictures' "The Ice Storm" and "The Full Monty" and advertisements for Nissan cars.
Will customers object to commercials at the ATM? Early anectodal evidence suggests they will actually be pleased, said Dale Dentlinger, director of product management of EDS' Consumer Network Services.
The videos will not run during transactions or slow them down, Mr. Dentlinger said. In fact, customers may find them an "enhancement," he said.
"We have evaluated advertising on ATMs for some time," Mr. Dentlinger said. "But not until recently, when we made advances in the quality of the video, did we consider it a viable new service."
EDS is the largest nonbank ATM owner in the country, with more than 6,000 machines. If the video experiment goes well, the company would expand it in March to more than 1,000 machines in New York, Los Angeles, and Chicago.
Mr. Dentlinger said EDS wants to create national appeal for the concept. But so far, corporate responses have been tepid.
EDS found the most time-consuming aspect of the advertising program was "to find people who want to do this type of advertising," Mr. Dentlinger said.
Before expanding video advertising, EDS will evaluate the software and consumers' responses. The company is waiting for results based on exit interviews.
"The biggest thing we need to find out is how much this causes the consumer to go buy the product," Mr. Dentlinger said.
EDS' video initiative comes at a time when ATM deployers are looking for new ways to make money. Many ATM owners are widening the array of noncash items-like prepaid telephone cards and postage stamps-the machines can dispense.
Though alternative revenue streams such as video advertising can help build profitability for nonbank deployers, most banks would prefer to use the screens to sell their own services.
"We view ATMs first and foremost as a delivery channel," said Ken Herz, a spokesman for Chase Manhattan Corp. of New York. "We use them for messages, but they are for your relationship with Chase and how we can build on that relationship."
As ATMs have proliferated, the average volume per machine has dropped. Between August 1996 and June 1997, the number of ATMs nationwide increased about 19%, to 165,000.
"As an industry, we have to look for other things we can do with ATMs," Mr. Dentlinger said. "The old business model of doing 4,000 transactions per machine per month-you're just not going to do that anymore."
In San Diego, EDS is using technology supplied by Diebold Inc., the ATM manufacturer based in Canton, Ohio. The advertisements appear in color on 1064i cash dispensers and use MPEG video cards supplied by Sigma Designs Inc. of Fremont, Calif.
The technology for video on ATM screens has been around for a while, but deployers have been slow to embrace the concept.
A year ago, NCR Corp. of Dayton, Ohio, introduced full-motion video on its personaS line of ATMs at the Bank Administration Institute's retail delivery conference in Dallas. Bankers did not snap them up.
"Technology shown at a trade show versus what you can do to implement it are two different things," Mr. Dentlinger said.
In consumer research, Fujitsu-ICL Systems Inc. of Dallas found that one potential obstacle is consumers' perceptions that video clips could impede access to cash.
"Consumers don't want to be bothered with a lot of things that slow down the transaction process at the ATM," said Rita L. Champ, senior vice president of the Japanese-owned manufacturer.
