The Outlook for DVD Rental Kiosks

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Blockbuster is known to be a strong supporter of self-service, having rolled out around 6,000 DVD rental kiosks in the US through a partnership with NCR. Recent announcements from Blockbuster have reinforced the fact that the kiosk is at the heart of their future growth – and even survival – strategy.
 
Jim Keyes, chairman and CEO of Blockbuster, explained that the company is in the process of revitalising its global brand and making more of its multi-channel model: “In recent months, we have enhanced Blockbuster’s competitive position by selectively advertising the availability of new releases 28 days before our largest rental competitors; launching a partnership with Comcast offering our by-mail service to their customers; growing Blockbuster Express to approximately 6,000 automated retail machines, deployed by NCR; and expanding Blockbuster On Demand through Verizon Wireless’ Droid X by Motorola, and through select Philips and Toshiba Blu-ray players.”
 
Blockbuster is moving away from the traditional store outlet by offering their customers a wider variety of ways in which they can have access to entertainment. They are installing Comcast-dedicated kiosks in selected stores to enable customers to learn about and sign up for Comcast services. Through their partnership with NCR, Blockbuster also offers customers the opportunity to rent DVDs online and return them to any of their kiosks.
 
Blockbuster On Demand gives customers instant access to the very latest new releases on the same day as DVD and Blu-ray. This service is already active on Philips Blu-ray players and 85 other consumer electronic devices in the US.
 
The development of Blu-ray is expected to be critical for the continuing success of the DVD rental kiosk market. Manufacturers must continue to push technological innovation and keep up with new and evolving distribution media to ensure that the kiosk remains an attractive proposition for customers.
 
Carlos Marco Rider, Managing Director of The Movie Booth, told us about the market for DVD rental kiosks and Blu-ray in the UK: “We’ve recently performed some market research which shows that demand for home entertainment products is on the increase, and if you read any industry reports at the moment, all of the talk is about the growth of DVD rental kiosks.”
 
“We also have new market developments such as the increased usage of Blu-ray – evidence shows that over a quarter of a million UK homes now have a Blu-ray player – so we’re closely monitoring these developments to see how they can further help grow our market.”
 
HMV is currently trialling entertainment vending kiosks branded ‘Shop in a Box’ in the UK, in locations such as train stations in London and a number of flagship cinemas. The kiosks are DVD/Blu-ray led, holding approx up to 150 titles, but they do also carry a small selection of PS3 games. They are located in high-traffic areas and are debit/credit card operated, which ensures that 18+ certification is achieved.
 
The kiosks also feature a built-in screen to enable customers to sample media. HMV will assess their longer-term viability later this year, but they expect that the kiosks will be successful, particularly in transport locations to cater to impulse or gift purchases from travellers.
 
Redbox too are rolling out Blu-ray titles to approximately 13,300 kiosks in the US. “Offering Blu-ray rentals is an exciting opportunity for Redbox to expand our product offerings and build on the relationships that we’ve established with millions of consumers nationwide,” said Mitch Lowe, President, Redbox. “Redbox is a convenient, affordable home entertainment provider, and we’re delighted to offer consumers their favourite movies on the increasingly popular Blu-ray Disc format.”
 
The extension of DVD rental kiosks through the addition of other entertainment is something that Alex Camara, VP and GM, NCR Entertainment Solutions, sees as central to supporting the growth of this market: “NCR are working on the addition of game rental, music and other entertainment offers to our entertainment kiosks. We have the capacity to extend rentals to other media and also incorporate digital download of content.”
 
NCR has carried out a pilot of downloading movies from kiosks to portable memory cards that can be used to play content on TVs, computers and mobile devices. Analysts at JP Morgan, though, are more reserved about the long-term growth of the DVD rental kiosk market, believing that the growth in online video will change the entertainment market.
 
Lovefilm is just one of the companies that are embracing the possibility of online video streaming, as well as direct-to-TV. Lovefilm is one of Europe’s leading film and TV, digital and DVD rental subscription services, with titles available to rent online which are distributed and returned by post. They also provide movies to watch online and stream direct-to-TV. They have announced a number of partnerships, for example with Samsung and Sony, to bring DVD rental into the living room.
 
The value, choice and convenience proposition is at the core of what self-service has always built its success on. It follows, then, that if DVD rental kiosks can maintain this focus they will still be able to compete and have a rightful place in this market. Technological innovation in DVD rental kiosks to embrace the new forms of media storage and download will be essential to ensure that kiosks remain at the forefront. Blu-ray and other forms of distribution are an opportunity for the DVD rental kiosk market, as long as manufacturers continue to innovate.
 
Joachim Pinhammer, Senior Retail Technology Analyst at Planet Retail, told us, “There is no doubt that streaming will have an effect on DVD rentals as a whole, but self-service DVD rentals will still have good opportunities to target quality conscious viewers and the Blu-ray market in particular.”