What Percentage of DVDs Are Rented Today Through Vending Machines?

The NY Times covers the dispute between the studios and Redbox today. (Just to recap, the studios worry that dirt-cheap $1 rentals via kiosks will hurt their DVD sales and even could put a crimp on VOD and digital downloads... and so they're trying to withhold DVDs from Redbox until four weeks after their initial DVD release.)

But there's this interesting tidbit in the story about where the DVD rental business stands today:

Redbox and its vending rivals now have 19 percent of the rental market, compared with 36 percent for rent-by-mail services (Netflix) and 45 percent for traditional stores, according to the NPD Group, a market research company. NPD estimates that vending will grow to a 30 percent share by the end of next year, at the expense of traditional stores.

I didn't realize that vending machines and Netflix now represent the majority of the DVD rental biz....

The Redbox Experience

I rented two movies from my local Redbox kiosk in the past week ('Rachel Getting Married' and 'Marley & Me' -- the latter chosen by my spouse, I feel compelled to add). I used a free credit coupon that you can get from their Web site for 'Rachel,' and we paid $1 for a one-night rental of 'Marley.'

Here's my take:

- Redbox is a classic low-end disruptor, as "Innovator's Dilemma" author Clay Christensen would call it. They are attacking the video market with a cheap price, and targeting the mass market, where video selection is not all that important -- they just want the big hits. (Each Redbox kiosk stocks 200 titles.) It's cheaper, even, than renting an on-demand movie from the cable company.

- The selection ain't bad. Our local kiosk had at least four or five titles that seemed worth watching, and I don't feel like my tastes would qualify as "mainstream."

- I wonder if movies stop showing up on the kiosk's screen when they're not available. Hard to tell how easy or hard it is to rent hot new releases from the kiosks. (Perhaps you'll comment.)

- Are you old enough to remember the early days of ATMs, when banks that had them only had one, and customers weren't very familiar with how they worked? Redbox is like that. Since there's one kiosk, if you get in line behind someone, you may be waiting a while. Similarly, if you're at the kiosk and want to spend a few minutes considering the choices, you may feel rushed by someone tapping their foot behind you. (That, my wife explained, was what resulted in 'Marley & Me.')

- The experience was perfectly pleasant, though I would've liked to see some star ratings or reviewers' comments attached to each movie description. Even if you returned a movie a day or two late, you'd still be paying just $2 or $3 for the rental, and wouldn't feel like you'd been fleeced.

- My local Redbox is near the exit from the grocery store. They're going to get people to rent movies on nights when they might not have stopped by the video store. So this will "steal" some time from TV and pay-per-view.

- With 15,400 kiosks already up and running, and one new one being installed every hour, Redbox is also gonna kill plenty of local video stores and hurt the surviving chains. After our first rental, my wife said, "Let's not use this again. I don't want the local place to go out of business." (And we're already Netflix subscribers, visiting the local video store 6-8 times a year at most...)

Your thoughts?

Post-Thanksgiving Linkage: Blockbuster Kiosks, Streaming Video Piracy, Speed Racer, Vudu

- Blockbuster is gonna try putting automated movie rental kiosks into Papa John's pizza joints and Family Dollar stores. DVDs will rent for just a buck, cheaper than at Blockbuster's traditional outlets, and they can be returned to any kiosk -- not just the one they came from.

- Slate has a great piece on a new kind of online movie piracy. Dan Morrell writes:

As the MPAA has focused on BitTorrent downloading, however, a newer, more popular kind of piracy method has come along. BitTorrent is out. Streaming video is in.

Before it was shuttered by European authorities in October, the British-based TVLinks—which offered links to hundreds of pirated movies and television shows—had become perhaps the Web's leading destination for illicit streaming video. If you've never heard of it, you're not alone: A LexisNexis search found only four mentions of TVLinks in major news sources over the past year. The Pirate Bay, one of the most popular torrent Web sites, was cited more than 300 times. The lack of hype didn't stop the site's spread. According to Web traffic analyzer Alexa, TVLinks passed both the Pirate Bay and TorrentSpy in global traffic rank this August. At the height of its popularity, TVLinks ranked 160th in global traffic, near the level of the New York Times.

- Looks like the Wachowski Brothers are taking the green screen approach with 'Speed Racer.'

- To help market its $399 set-top box, Vudu is throwing in high-def copies of two of Universal's 'Bourne' movies. (Here's more on Vudu.)

- My mother-in-law asked me on Thanksgiving for my advice on whether she should buy "a Blu-ray." When I mentioned the format war, she didn't seem aware of it, and she didn't seem to have much recognition that HD DVD existed. She and my father-in-law are big Netflix users, and Netflix offers movies in both Blu-ray and HD DVD, so I told her the only possible problem could be if HD DVD wins, they'd need to buy a new DVD player in a couple years. Just a data point...

3-D in Asia ... Movie Gallery Heads for Bankruptcy Protection

- The Hollywood Reporter has a piece that focuses on the emerging market for 3-D screens in Asia. The two players doing the conversions (or hoping to) are Real D and IMAX. From the piece:

"Asia is somewhat in the same position as Europe is in," [Real D CEO Michael] Lewis said. "The digital business arrangements have not been worked out, and you are dealing with more indigenous content, which means that more of the digital projector has to be paid for by the exhibitors."

Lewis estimates that 3-D digital cinema installations include roughly 14 installations in Korea, 16 in Australia and three in Japan. Other sources put the number of 3-D screens in Korea, where chains like CGV and Lotte have led the transition, as high as 20.

There's also a passing mention of In-Three, a company that wants to "dimensionalize" conventional movies. They still haven't announced their first project, despite having launched in 2005. About time, guys?

- It's not a great time to be in the video store business. The Wall Street Journal reported Friday that Movie Gallery (which owns Hollywood Video) is about to file for bankruptcy protection, hoping to emerge in early 2008. You'll recall that Movie Gallery bought the MovieBeam set-top box service back in March.

MovieBeam's Web site, interestingly, has been down for maintenance for almost two weeks. That must mean the service is doing really well. From the site: "Normal operation will return no later than the end of the day on Wednesday October 3rd."