Wednesday, December 05, 2007

Blockbuster and Netflix's Next Worry - Not Downloadable Movies

The progression of the video rental business reads like most other industries that have been transformed by technological advancements. For years, even as Blockbuster has joined Netflix in creating a viable online rental business, prognosticators have claimed that even this aspect of the business (wherein users get videos in the mail) will get marginalized by Video on Demand on DVRs and the ability to download movies directly off the web. Bloomberg had an interesting piece out about the next threat to the video rental franchises - DVD kiosks. The business is simple: put kiosks holding 30 or so of the hottest titles and charge a dollar a day for the rental. It's a no frills method for people that like the convenience and price (Blockbuster rentals from the store can run you $4+). See an excerpt from the article below.

DVDPlay Chief Executive Officer Chuck Berger predicts the kiosks will garner up to 25 percent of the DVD rental market by 2011. With each machine generating annual sales of $30,000 to $40,000, the kiosks should top $270 million in revenue next year, or 3.4 percent of the DVD rental market, Adams said. There may be 50,000 in North America in five years, based on growth estimates from Redbox, DVDPlay and TNR Entertainment Corp., the three biggest companies in the industry, lifting total sales to between $1.5 billion and $2 billion.


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