Vending machine maker NCR formed a partnership with Blockbuster to take on Redbox about a year and a half ago. But they took their time with the roll-out, giving Redbox, which now operates more than 20,600 kiosks around the country, a big lead. Lately, however, NCR and Blockbuster have been trying hard to catch up, with NCR saying last week it plans to deploy 200 rental machines in New York. With the DVDPlay buy, the company now estimates that it will operate more than 3,800 kiosks by the end of the year.

DVD rental kiosks have been a controversial topic for the industry. A recent study by the Los Angeles Economic Development Corp. estimated that Redbox, with its ultra-cheap rentals, will cost Hollywood $1 billion in revenue alone. Redbox, on the other hand, claims that the big studios are sabotaging its business, and has taken three of them to court this year. And then there are scrappy upstarts like Big Box DVD, which is trying to undercut its competition by offering rentals for 6 cents an hour.

NCR plans to eventually let consumers download movies on memory cards, an idea Blockbuster CEO Jim Keyes has been talking about for a while. Redbox SVP of Marketing and Customer Experience Gary Cohen told us at NewTeeVee Live that his company has started to experiment with digital downloads as well.

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