Capital concerns holding back some kiosk deployments

Not that that should come as a surprise to anybody who has ever tried to budget for an interactive kiosk project -- deploying a single system can take seven-figures, depending on the complexity of the kiosk and the type of application it will be providing.

DVD Station, founded in 2001 in San Francisco, installed its kiosks in three Barnes & Noble locations last year, but those have since closed and plans to expand into more of the chain’s stores shelved.

Meanwhile, New York-based DVDXpress, also founded in 2001, is still on track to bow 200 new machines within the next six weeks at southeast regional supermarket Bi-Low/Bruno’s. That will add to DVDXpress’ existing 100 grocery-based kiosk spots.

The start-stop nature of kiosk ventures seems tied in part to fluctuating commitments to capital expenditures at various chains.

The initial cost for one DVD kiosk is estimated at $10,000 to $30,000, so a retailer with 500 locations might have to invest up to $15 million for a major rollout.

“This category requires a lot of upfront capital,” DVD Station VP corporate development Bill Fischer said. “There’s a real perception, especially among investors, that the video rental business is dead. But we think vending can be a good solution with a greatly reduced cost structure.”

We already know that the retail sector is willing to experiment with new techniques to keep customers coming back to their locations. Unfortunately, few will be willing to spend more than $100,000 on a trial of a very new technology, and considering what some of these devices cost, that means a trial of only a few locations, which may not be a good sample to base projected results on. The whole article is quite interesting, you should go check it out.