Redbox claims locations leader status
Blockbuster tests rental kiosks
By Ned Randolph -- Video Business, 11/26/2007
NOV. 26 | DVD kiosk company Redbox has reached 6,000 locations, using the milestone to lay claim to being the largest rental operator in the U.S.
In terms of individual locations, that does put the kiosk operator in 1,000-plus outlets more than market share leader Blockbuster Inc. Blockbuster has about 4,800 locations in the U.S., including 4,030 company-owned stores.
Blockbuster continues to easily lead the industry in rental revenue, however, with $2.98 billion in rental revenue worldwide for the first nine months of 2007. Its share of the estimated $7.8 billion U.S. rental market is more than 30%, compared with 2% to 4% for the entire kiosk channel.
As a private company, Redbox does not disclose financial information.
And Blockbuster is not standing idly by. Recognizing the potential being tapped by Redbox and other kiosk operators, Blockbuster has begun testing Blockbuster Express-branded vending machines in Lexington, Ky., at Papa John's pizza and Family Dollar discount store locations, a Blockbuster spokesman confirmed. The company also has a small, undisclosed number of vending machines in other cities.
Redbox has expanded rapidly, as has the entire DVD rental kiosk sector.
From 2003 to 2006, Redbox grew to 1,960 kiosk locations. Since then, the number has more than tripled. In June, Redbox announced 4,000 locations, and by September, the number had grown to 4,800 locations. Just two weeks ago, Redbox announced a deal to place kiosks in 193 Walgreens stores.
Chuck Berger, CEO of Rival kiosk company DVDPlay, recently predicted that the kiosk sector would collectively grow from 2% market share in 2007 to 5% in 2008 and more than 20% by 2010 or 2011, based on dramatic growth expected in the number of kiosks in operation. He said DVDPlay in 2008 plans to add about 2,000 kiosks to its current base of 1,300 machines.
Through its ties to McDonald’s, which has an ownership stake along with Coinstar and others, Redbox already has the capacity to dominate a market in terms of locations when it moves in.
"Typically, as we enter a new McDonald’s market, Redbox instantly features more locations than its three largest competitors combined," said Gary Lancina, Redbox VP of marketing. "Redbox is currently available in 21 of the largest 25 markets nationwide."
That includes 46 states, and Redbox kiosks are expected to reach every state in the continental U.S. by the end of 2007, including 400 new locations this month in Baltimore; Dallas; Dayton, Ohio; Las Vegas; Little Rock, Ark.; and Roanoke, Va.
