The popular DVD rental kiosks you see in and outside stores are growing. Led by the popular Redbox kiosks, a new study predicts the kiosks could make up to 30% of the rental market by the end of next year.
Currently, Redbox and similar kiosks represent about 19% of the rental retail market. Popular on-line rental company Netflix makes up 36% while brick and morter stores account for 45%.
With its price point of a dollar per night, Redbox could threaten the business model for brick and morter stores and possibly begin to eat into the business for on-line rental companies, according to Variety.
“Consumers are obviously responding positively to the perceived value of $1-per-day rentals,” said NPD analyst Russ Crupnick. “And they appreciate the convenience offered by video rental kiosks.”
NPD conducted the research and published the results.
In the first half of the year, U.S. consumer spending on DVD and Blu-ray rentals rose 8.3%, according to Rentrak, largely due to kiosks, while disc sales fell 13.5%.
However, as we reported on a recent Slice of SciFi, some Hollywood studios are not taking kindly to the kiosks, saying that the dollar per night rental fee is devaluing their product. Some studios are refusing to allow Redbox to rent their newest releases for the first few weeks of release to drive consumers to rent from higher priced outlets or purchase the film on DVD.
Redbox currently has agreements with many studios to destroy rental discs after they are taken out of rotation rather than re-selling them to consumers.
That policy is helping the company to land deals with major studios, according to the Variety report. The latest is Paramount Studios, a partnership that will include several of the biggest films of the year.
I heard on the podcast some confusion as to why people would use Redbox. As a consumer who uses Redbox (in combination with other rental sources – Netflix), let me add my two cents. I use Redbox under three situations.
1. Vacation. This summer I took the family on a long vacation. For a couple of days, it rained, keeping us away from the pool, hikes, etc. we had planned. Finding a local Redbox kiosk was easy and a cheep way to keep the kids entertained. Over the course of a week’s vacation, we rented maybe 4 movies. In addition, the ability to rent from one kiosk and return to another is a huge help on a vacation. More than once, we have loaded up the van, stopped at a local kiosk on the way out of town and rented a movie for the kids to watch while the miles roll by (on a laptop computer). When arriving at the destination, we return the DVD to a local kiosk. The same is then done in reverse. None of that can be done with traditional rental options though Netflix can approximate some of it with Streaming or putting a film into the mail from the vacation locale. But Netflix cannot do all of that and can’t cover for ’emergencies’ or changes in plans.
2. Kids. Unlike adults, it can be hard for kids to plan out a Netflix queue. Particularly younger kids. We have a weekly family movie night (with popcorn and everything). Each member of the family gets to choose the movie on a rotating schedule. Often, the kids choose a movie we already own. If they don’t, Redbox is the easiest, fastest and cheapest option for getting them a movie quick.
3. Surprise. On rare occasions, I find myself in need of something to watch with little time to plan. i.e. A while ago, a relative of my had a little accident with their knee and ended up spending a bit of time in the hospital. With a laptop, Redbox and a few books, they were able to pass some of that recuperation time more pleasantly.
Obviously, there are other options to each of these situations. But Redbox is an attractive choice that compliments (but would never replace) an online streaming or mail rental service.