Article
Owner-operator DVD-rental kiosks filling coverage gaps left by big deployers
Industry experts say owner-operator business models can exploit niche markets untouched by redbox and Blockbuster Express.
April 13, 2010 by Matt Cunningham — Editor, NetWorld Alliance
DVD-rental kiosk giant redbox has more than 20,000 units deployed across the country. Its biggest competitor, NCR's Blockbuster Express, is aggressively expanding into territory left vacant by the closure of brick-and-mortar video rental stores, putting as many as three or four kiosks in some locations.
The widespread deployment by the big players might intimidate some businesses from getting into this corner of the self-service kiosk industry. But the providers who help owner-operators launch small chains of DVD-rental kiosks say opportunities abound for savvy entrepreneurs.
"(Redbox and Blockbuster Express) go after the biggest corporate accounts," said Scott McInnes, CEO of kiosk supplier DVDNow, "whereas for us, we're the exact opposite. If we sell eight machines, we can match (the buyer) to a guy who owns 15 stores. Redbox wouldn't touch that guy. But he could be the guy who has the best shops in the community."
McInnes says DVDNow provides customer support in a manner similar to franchise arrangements: along with selling kiosks, it provides a measure of sales, marketing and business support for its clients.
And business, he says, has been good, thanks to redbox and Blockbuster Express.
"They've done a great job of creating demand for the machines and leaving whole segments of the market out there," he said.
Daniel Kenyon, vice president of marketing for kiosk supplier ELO Media, shared McInnes' viewpoint.
"Where the owner-operator fits best is where you have a niche," he said. He explains that many business owners who buy ELO Media's kiosks find micro-markets — fans of Russian-language films in New York City, or churches in Missouri wanting to carry Christian films.
"You're doing something that's more content-oriented," he said.
Kenyon pointed out that ELO Media is using its smaller-than-redbox stature to leverage technological advances on behalf of its clients. The company's kiosks can support an array of digital signage, opening the door for advertising revenue (DVDNow's kiosks can also support this feature) and Kenyon says ELO Media's kiosks are designed so that future digital-download capability could be installed in a plug-and-play manner.
"It's one thing for us to be able to be nimble and adapt better than redbox," he said. "We're trying to out-think them on the technology side and where it's coming from."
As more movie renters switch from traditional video stores to kiosks, both suppliers said the market is ripe with small grocery chains, convenience store chains and other small businesses that want to host DVD-rental kiosks but can't offer the size and traffic that the big deployers require.
"This business is still in its early stages of taking off," McInnes said. "You've got hundreds of thousands of convenience stores and grocery stores, and most of them are independently owned."
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