Redbox tests DVD sell-through kiosk
By Susanne Ault -- Video Business,10/16/2009
OCT. 16 | PHYSICAL: Redbox is poised to expand a test of sell-through machines offering regular-priced DVDs, as a complement to its popular $1 a night rental kiosk business.
Redbox’s sell-through kiosks are the same size as the rental machines but black.
The company is currently testing dedicated sell-through kiosks under the brand Vidigo in five locations in Los Angeles. Titles, spanning new releases and catalog, are tagged between $19.96 and $20.95. The Vidigo kiosks are the same size as Redbox kiosks but colored black.
Redbox will soon add to the test smaller sell-through machines scaled to tight quarters such as convenience stores, president Mitch Lowe told Video Business. Redbox already has spread many of its rental machines into the convenience channel.
The company also continues to test Blu-ray Disc and videogame rentals, Lowe said.
Redbox’s push into sell-through comes at a time when the company is facing heat from many studios who believe the $1 a night rental model is biting into their film revenue. Starting later this month, 20th Century Fox Home Entertainment and Warner Home Video will begin distributing titles to Redbox about a month after they street widely elsewhere to better preserve their DVD sales business. Universal Studios Home Entertainment has imposed a 45-day delay on titles to Redbox since last year.
However, Redbox executives are circulating a study, conducted this month by Interpret, that indicates that Redbox renters are not cannibalizing studio sales business, and in fact are heavily supporting it. In the past six months, Redbox renters said they bought 3.3 new DVD or Blu-ray titles and 1.4 used DVD/Blu-ray discs. That compares to non-Redbox renters who say they purchased 3.1 new DVD/Blu-rays and 1.2 used DVD/Blu-rays. Additionally, the heaviest Redbox users, who rent at least one $1 title weekly, say they’ve bought 4.4 new DVD/Blu-rays and 1.9 used DVD/Blu-rays.
This data is similar to results from a January NPD Group study showing heavy new DVD purchasing among Redbox renters.
Lowe admitted there is some sales decline at Walmart in locations that include $1 rental machines. However, he believes that the drop is so slight that it has little significance to overall studio business.
“There is a 1% [negative] impact on a title’s sales at Walmart when comparing that [title’s performance] at stores that have rental machines to its sales at stores that don’t have them,” said Lowe.
He also reconfirmed Redbox’s intentions to offer Fox, Warner and Universal titles on street date by buying titles from other sources, including at mass merchants. Redbox pays about the same for titles as the company would through traditional studio or wholesale distribution means, he said, but faces additional costs from labor and travel.
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| Submitted by: | Fettastic (afettinthehand@yahoo.com) 10/20/2009 2:40:15 PM PT |
| Location: | Madison, WI |
| Occupation: | Purchasing Coordinator/Marketing |
They're looking at those statistics from the wrong end. It's pretty ridiculous to posit that people who decide to do a $1 rental will magically decide to buy more DVDs than anyone else. That is preposterous. All those numbers prove is that people who buy a lot of movies ALSO use Redbox. This is surprising? I buy a crazy amount of movies and I suppliment that with Netflix. Does that mean Netflix is making me buy more movies?
| Submitted by: | Matt (mkfellows@gmail.com) 10/20/2009 12:41:44 PM PT |
| Location: | Portland, OR |
The Kiosk is here to stay unless McDonald's franchises begin to close en masse. They've have a built-in mechanism to self-sustain. The fact that they've extended their presence into grocery stores and retail chains like WalMart means it's already GAME OVER.
In a worst case they could just occupy retail space in OTHER restaurants like Jack in the Box, Wendy's...etc.
Remember McDonald's sold ALL their interest in Redbox back to CoinStar...so the machines could extend to other fast food franchises.
$1-per-night is HERE TO STAY.
If you own a video store...I would say take $25K and front your store with a kiosk of some flavor...just to allow your customers 24-hour access to the titles.
People LOVE the RedBox...there's a LINE at my Albertson's...they've added a second machine and there's a McDonald's with a 3rd machine less that 50 yards away...
They're not going anywhere.
| Submitted by: | Buck12 10/19/2009 2:07:06 PM PT |
| Location: | Los Angeles |
JD, completely agree with you, however, these kiosks are a catch22 in terms of your statement about jobs & the economy. It's terrible that these kiosks are closing store fronts and taking revenue away from the studios who aren't embracing them as new channels of business (Sony is going to make a bundle of cash off their deal they made), as well as eliminating jobs. BUT in a down economy the consumer is going to look for the most inexpensive way of renting a film. When they can get a rental for $1 it's hard to go back to paying $5 for a 2-day rental regardless of whether or not it's coming at the expense of the mom & pop shops & Blockbusters. That's capitalism!
The rental and sell-through business is going through a huge shift right now (like music did back in the late 90's/early 2000's), and as unfortunate as it may be Redbox, Netflix and digital (although still about 10 years away from going mainstream) will be at the forefront.
| Submitted by: | JD 10/18/2009 3:58:49 AM PT |
| Location: | Metropolis, IL |
It's just a matter of time before kiosks fall from grace. They depend on other businesses to give them floor space, but who wants to install something that will steal your sales and send your money off to some other company? I own a video store and wouldn't put one of those things near me. Wal-mart is going to do the same eventually, and that's the only place I have seen these things in my area. Anyone with half a brain is going to see these things making money in their space and think, Hey! I want a peice of that! Besides, Redbox steals jobs from real human beings. In this economy, do we really need to give our jobs to machines?
| Submitted by: | Dave Wright (dwright@wrighttechnicalsolutions.com) 10/17/2009 9:14:27 AM PT |
| Location: | New York |
| Occupation: | CE Industry Technical Consultant |
I am glad to see that Redbox is moving forward even with the studios trying to limit their availability to content. The idea of a purchase kiosk is only natural seeing the success of the rental ones.
Only problem is the locations for these kisosks, Walmart already has cut back on sales and other retailers that sell DVDs would not want the kiosks near them. While there are plenty of supermarkets and pharmacies that will have them, is that enough to sustain the machines. The supermarkets and pharmacies might reluctant as well as they also sell DVDs.
Oh well, we need to wait and see, but in any case I believe that it is a great idea even with the issues that it faces.
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