Wednesday, July 11, 2007

Can burn on demand DVD kiosks save Blockbuster?

That's exactly the question that this article at Seeking Alpha asks about the movie rental giant. After all, we know that the DVD rental kiosk market has picked up considerably from the days when early pioneers like RedBox were testing out the business model. Yet, while some estimates indicate that we'll have over 10,000 of these devices in the US market by the end of 2007, the country's largest video rental retailer has been notably absent from participation. But rather than missing out on an "obvious opportunity," Seeking Alpha suggests that they may instead be passing up this wave of self-service devices in favor of the next generation terminal: a kiosk that would allow patrons to burn limited-time-use DVDs from a catalog of thousands of titles. The article speculates:
To a certain extent, Blockbuster will be interested in using the burn on demand kiosks in order to minimize real estate and cut down on employee costs, but the real benefit of the kiosks will be the new franchising opportunities that will open up to them. As the video store industry has gone into consolidation mode, Blockbuster’s franchisees have had a very difficult time adjusting to the new rental environment. Disagreements over the online program and the end of late fees has even caused one of their first franchise owners to sue Blockbuster for breach of contract. As the market has collapsed, attracting new capital has been difficult and Blockbuster has struggled in replacing this lost revenue.
Hardware and maintenance costs and licensing/security issues loom large as potential sticking points, but I really liked Seeking Alpha's notion that eventually Blockbuster's stores will look more like a Kinkos, with rows of terminals that can quickly produce any movie from a new blockbuster release to older, more obscure titles that don't often see the light of day (thank goodness for Netflix).

I'll say this: DVD rental kiosks make money. That industry as a whole has bucked the trend and once again proved that consumers really put convenience above all else. Fundamentally, burn-on-demand kiosks should play in the same space. However, CD burn-on-demand kiosks haven't fared as well, since it's fast and easy to download music right to a home PC. That's not the case (yet) for movies, but will it be enough to get consumers to embrace them? With a larger catalog of available titles, it would seem like a burn-on-demand kiosk would have more potential opportunities to reach out to increasingly fickle consumer audiences. But at the same time, the added cost and complexity of the devices could drive up rental prices or drive down overall profitability. (If you're new to the kiosk world you might want to take a look at WireSpring's series of pages and articles about kiosks).

Tags: Blockbuster, burn-on-demand, DVD kiosk

1 comment:

Anonymous said...

Are they using this place