Florida Times-Union

Jacksonville's Global Axcess diversifying into DVDs
The ATM company is launching its DVD business with movie rental kiosks.

By Mark Basch

Story updated at 4:30 AM on Tuesday, Jan. 26, 2010

WILL DICKEY/The Times-Union
Global Axcess President and CEO George McQuain with a DVD rental machine.


After some shaky years in the mid-2000s when the company was still developing, Global Axcess Corp. has turned solidly profitable in the last couple of years. The Jacksonville-based company, which operates automated teller machine networks, has made money for 12 straight quarters. But now it’s looking to do more.“There was a sense here that we needed to diversify,” said President and Chief Executive Officer George McQuain. And when company officials considered ways to diversify, they thought, “what is it we do really well?”


Global Axcess operates about 4,500 ATMs in 43 states that are placed in grocery and convenience store chains and also in mom-and-pop establishments like bars and restaurants. From surveying its customers, Global Axcess found it had a good reputation for the reliability of its ATMs and decided it could use that to operate other types of machines with similar technology.

“An ATM is a coke machine that, instead of dispensing cokes, dispenses cash,” McQuain said.

But Global Axcess wanted to get involved in vending machine technology that’s a bit “sexier” than soda machines. What it settled on is DVD kiosks, the machines you see outside a supermarket or fast food restaurant where customers can rent a DVD movie for $1.

After a pilot program of 24 DVD kiosks was successful, Global Axcess last month announced it was launching its DVD business on a full-scale basis, hoping to add at least five to 10 locations per month in the first half of this year.

“It’s kind of sexy and we know the market is there,” McQuain said.

“It’s the fastest-growing segment of the rental market,” said Michael Arrington, an analyst at California-based Adams Media Research who tracks DVD market trends.

Arrington said DVD kiosks, as opposed to traditional stores like Blockbuster or subscription services like Netflix, increased their share from 6 percent of the rental market in 2008 to 11 percent in 2009, and are projected to reach 15 percent of the market this year. He said the convenience of the kiosks and their low rental costs are contributing to the growth.

Meanwhile, Global Axcess is still looking to grow its ATM business. The company reported net income grew 35 percent in the first nine months of 2009 to $1.1 million. But revenue fell 5 percent to $16.1 million.

The decline in revenue can be attributed to the weak economy, as people get less cash from ATMs. Global Axcess’s ATM revenue comes from surcharges when customers use one of their machines. The customer will have to pay a fee generally between $1.50 and $2.75 when they get cash out of one of the ATMs, and the bank that issued the customer’s card also pays a transaction fee.

McQuain said the company saw fewer transactions during the summer, which may be the result of people taking fewer or shorter vacations. He also said the company saw more customers using its ATMs for balance inquiries to see how much money they had left.

“It appears to me there are a lot of folks still struggling financially,” he said.

The market for ATMs still looks strong as the economy improves, as consumers will still use them to get cash when needed, according to an industry report last week by Joshua Elving, analyst at Feltl and Co.

“While card-based payments continue to rise, it is interesting to point out that the mix of cash for payments continues to hold its share, while almost all gains by cards have been at the expense of checks. At some point in the future, we believe the mix of cash will decline, but it may be at a slower pace than previously believed,” Elving said.

He also said the use of prepaid cards by businesses in place of payroll checks and by the government in place of benefit checks will bring consumers without a bank account to ATMs.

Global Axcess employs about 50 people, with about half of them in its Jacksonville headquarters offices, McQuain said. The company has smaller offices in six other states.

“Most of the people are people that stuck with us,” McQuain said. He said the company entices employees to stick around with its bonus policy, in which every employee shares in year-end bonuses, he said. That encourages innovation that can improve profitability.

“People are always coming up with great ideas,” he said.

Global Axcess had been keeping a relatively low profile but hired an investor relations firm in the summer to promote the stock. That followed the March settlement of a lawsuit by an investor that had been hanging over the company.

“We felt until we got the lawsuit behind us, we couldn’t push the stock,” McQuain said.

The lawsuit involved a $3.5 million note issued to an investment company in 2005. As part of the settlement, Global Axcess took a $467,391 loss on the early extinguishment of debt, which cut into its 2009 earnings. But getting that issue behind it is allowing the company to pursue growth strategies, he said.

Global Axcess’s stock, which had been trading below $1 for most of the past four years, inched up above $1 two weeks ago.

“I think we’ve come a long way and still have a long way to go,” McQuain said.