Blockbuster entering the DVD kiosk rental business
It appears that Blockbuster is taking the old adage of, “If you can’t beat them, join them” to heart and is going into the DVD kiosk rental business, which is currently dominated by the Coinstar-owned Rebox locations.
Redbox has been carving a path of destruction through the DVD rental industry with its ubiquitous red vending machines. With a pricing structure of $1 a night for new releases, Redbox has even landed itself in court thanks to the likes of Universal Studios Home Video, Sony Pictures Home Entertainment, 20th Century Fox Home Entertainment and Warner Home Video due to their feelings that the price point devalues their products. The biggest concern is that by the DVDs being priced so cheaply for rental upon release, it is cutting into the sales of those same discs to consumers at the retail level.
Paying little mind to the current problems Redbox is facing, Blockbuster is teaming up with NCR Corp. to launch Blockbuster Express kiosks that will do the exact same thing. According to The Wall Street Journal (registration required), the new Blockbuster branded kiosks can hold up to 950 DVDs compared to Redbox’s 500 unit capacity. The new kiosks are also expected to have 2500 units in place before the end of the year, primarily in the New York City area, a market that Redbox has had difficulty breaking into despite its 20,000 units already spread across the country.
The current deal between Blockbuster and NCR Corp. is a licensing agreement wherein NCR licenses the Blockbuster brand name for its units. The two companies are also experimenting with machines that will allow customers to download movies onto SD cards for rental,
Considering the current legal hurdles Redbox is facing with the video companies, and the continuing rumors that movies may be with held for rental for 30 days now to preserve retail sales, it seems odd that Blockbuster wants to test these waters now. Perhaps they are hoping the weight of the retail stores will make the video companies think twice about trying to stop them, but as the company has lost more and more market share to the likes of Redbox and Netflix, I don’t think they should count on it.
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December 1st, 2009
Sean there is a typo in the text – it is withheld not with held. Feel free to delete this comment.