Published:
28-May-09
Screen Digest's US arm, Adams Media Research, has revised upward its forecast for the kiosk-based (also known as vending machine) video rental market, based on reported results from market leader Coinstar (Redbox) and additional rollout plans from NCR and its partner Blockbuster. Coinstar expects to have fielded a total of around 20,000 video rental kiosks by the end of 2009. Meanwhile, NCR plans to roll out 10,000 kiosks under the Blockbuster Express brand by the end of 2010. NCR, which already owned a 19% stake in The New Release Company (which includes the TNR and MovieCube brands), announced on 21 April that it would acquire the remainder of the company.
AMR expects kiosk deployments to grow from just under 18,000 units at the end of 2008 to nearly 25,500 in 2009. That number should near 50,000 by 2013.
We estimate kiosk rental spending reached nearly $486m (6% of total rental spending) in 2008 and expect it to exceed $830m (10%) in 2009. Spending will pass $1bn near end of 2010, reaching nearly $1.5bn (17%) in 2013. We believe kiosk rental is only partially cannibalistic of in-store rentals and have adjusted projected spending in that market downward slightly.
In keeping with Screen Digest data on other world video markets, US data in Video Intelligence quantifies the market by subscription (predominantly online) and transactional rentals (mainly store-based but including kiosks). The attached chart shows the split of subscription, kiosk and store-based rentals; for further information please contact AMR (see link below).
Our take...
In-store rental spending continues to decline but the overall market is essentially flat thanks to phenomenal growth in online subscription and kiosk spending. The subscription and kiosk rental models, from a consumer's perspective, are simply better value when all you really want to do is watch a movie without buying it. Though overall spending is flat, transactions are going through the roof. After years of declines, transactions actually grew in 2008 and are expected to increase again in 2009. People are renting more movies, but paying less for each experience.
Brick-and-mortar rental stores offer a different kind experience. Those still frequenting physical stores are probably those that enjoy browsing racks of discs to find the perfect content for movie night. Market leader Blockbuster, while trying new models like subscription and kiosk, is banking on that customer base to expand its revenue. Experimental juice bars and music videogame displays may or may not bring in these traditional renters and keep them spending, but the company has already proven its ability to build revenue from non-rental product such as merchandise and hardware.
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