Tuesday, January 18, 2011

U.S. video rentals from kiosks now exceed rentals from retail stores

According to the NPD Group, in Q3 2010, rentals of DVDs and Blu-Ray discs from kiosks (primarily Redbox) exceeded those from retail stores (including Blockbuster) for the first time. Netflix and other subscription services accounted for 41% of all video rentals, while kiosks accounted for 31%, and in-store rentals accounted for 27%. Year-to-year, kiosk rentals increased 10%, subscription services increased 2%, and in-store rentals declined 13%.

Keep in mind that the numbers reported by NPD Group only cover rental of physical media; if streaming video and digital downloads were included in the figures, retail's share of video rentals would be even lower.

This news comes at the same time that Blockbuster received a two-week extension from the U.S. Bankruptcy Court to file a reorganization plan and hire a new CEO. The Dallas Morning News reports that Blockbuster is looking for as much as $250 million in additional financing in order to exit from bankruptcy. Bloomberg Television is reporting that some Blockbuster creditors are balking at putting more money into the company and are suggesting that the company liquidate.

In any event, Blockbuster's retail locations are an endangered species. For the company to survive, it has to increase its presence in the kiosk segment and build a viable online business.
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