Monday, November 14, 2005
The Evolution of DVD Rentals?
Redbox. Remember that name. It's a wholly owned subsidiary of the McDonald's Corporation that is rolling out automated DVD Rental kiosks throughout the country. These rental stations -- which resemble ATM machines -- will dispense a DVD for $1 a night, to customers 18 years or older. There are no late fees. You simply pay $1 a night for as long as you have that film. The kiosks are updated weekly with the latest releases and are available in McDonald's restaurants, as well as in supermarkets such as Stop & Shop. So, is this the evolution of DVD rentals? Redbox is by no means the only company trying this approach. (CineQuest, FlickStation, ELO Media's DVMatic, and Coinstar are all throwing their hat into the automated DVD rental ring.) Automated approaches are growing in popularity. ATMs are now firmly established, but can you remember a time when the idea of being able to get your money from one of these machines seemed completely foreign? Automated check-out counters at supermarkets and Home Depots are becoming more and more accepted. And, let's face it, people have been getting Cokes and candy from vending machines for decades. So, if automation is the way of the future for DVD rentals, is it a good thing? Blockbuster gave us the DVD rental superstore, but in doing so, sanitized -- and therefore depleted -- much of its inventory. Netflix, in turn, fixed that problem with a greater inventory, but removed the immediacy factor. (You need to wait for them to mail the DVD to you and then you need to mail it back before you get another.) McDonald's Redbox approach (and the approach of other companies that have jumped on this bandwagon) retains the instant gratification aspect of Blockbuster, but saves you a trip to the store itself. Now, you can pick up a DVD with your large fries or your groceries. (Or, as others are offering, in your office before leaving work.) But here's the catch. A Redbox kiosk has a mix of just 45 of the most recent titles available. (Clearly, if you are going to dispense DVDs from a vending machine, like a bottle of Coca-Cola, you are going to be limited in space. Especially if you're going to have enough copies of each title to satisfy your customer base.) By comparison, Netflix boasts more than 50,000 titles. (But you need to wait to watch one.) So it's a trade off. But most of life is a trade off. The question is this: Is there enough room in the DVD rental biz for a Blockbuster superstore, a Netflix online mail catalogue and a Redbox kiosk? Only time will tell.