Report: DVD Kiosks Injecting New Life in Rental Market

LONDON: New research released by Screen Digest indicates that DVD rental kiosks such as Redbox in the U.S. are helping to slow the downward slide in the home-entertainment rentals market.

In the U.S., Screen Digest’s U.S. arm, Adams Media Research (AMR), reports that U.S. rental spending will be stable or even slightly up this year and will maintain its value out to 2013, thanks to online rental services, Blu-ray and $1-per-night DVD kiosks. By the end of 2009, almost 25,500 of these automated rental points will have been installed across the U.S., most operated by Redbox. These kiosks will deliver $830 million in rental spending, an increase of over 70 percent on 2008, expanding an average of 15 percent a year by 2013.

In Europe, however, Screen Digest expects rental spending to decline by 11 percent this year and by an average of 6 percent annually 2010-2013. Kiosks, however, are unlikely to help Europe’s ailing DVD rental market, Screen Digest says. "The concept of rental kiosks was actually invented in Italy about 20 years ago," says Screen Digest’s head of video, Helen Davis Jayalath, "and was quickly adopted across much of southern Europe. But unlike in the U.S., European kiosks tend to be operated by traditional rental stores and are seen as an extension of their business—they don’t tend to compete so aggressively on price. And there are plenty of markets—including the U.K.—where despite regular attempts the idea has simply not taken off due to a combination of cultural and legal issues."

She added: "We don’t believe that rental is strong enough in any European territory these days to support a substantial $1 (or 1 euro or £1)-a-night business. In 2008, the 100 million DVD households in the U.S. made almost 2.6 billion DVD and BD rental transactions between them—an average of more than 25 per household per year. Meanwhile Europe’s 135 million DVD homes rented 472 million times—3.5 times per household.

However, Blu-ray could be the jumpstart that Europe’s rental market needs. "Consumers who are considering upgrading to BD may be more inclined to do so if they can rent, as well as buy, the more expensive hi-def discs needed to make the most of it," says Screen Digest’s senior analyst, Richard Cooper. "And by the end of this year there will be 11 million European households who own a Sony PlayStation 3 games console—which is one of the best BD players out there. Rental, which is the ultimate try-before-you-buy‚ option, is a great way of persuading them to dip their toe in the Blu-ray water."

European consumers could be spending as much as 461 million euros a year on renting the hi-def format by 2013.