Redbox will add kiosks at 1,800 Walgreens

U.S. kiosk leader feeds self-service movie-rental boom

By Danny King -- Video Business, 2/27/2008

FEB. 27 | Redbox will add kiosks at about 1,800 Walgreens stores in the U.S. by the end of next year, allowing the largest U.S. movie-rental kiosk operator to lengthen its lead over competitors Moviecube and DVDPlay.

Redbox tripled its kiosk count last year and currently has about 6,800 machines in the U.S., including about 250 Walgreens machines, the company said in a statement.

Movie-kiosk operators are quickly expanding as chains such as Blockbuster and Movie Gallery are reducing store count. Earlier this month, Redbox, which is 95% owned by Coinstar and McDonald’s, said it would add machines in about 2,700 Wal-Mart stores by the end of next year. Including Wal-Mart and Walgreen’s locations, Redbox by the end of 2009 should have more than 11,000 kiosks deployed.

Last week, No. 2 Moviecube, owned by closely held The New Release, said it’s boosting its North American store count by about 50% to 3,200 this year after getting $11 million in funding.

Kiosk operators can charge less for movies than video stores because of lower costs from less real estate, less labor and revenue-sharing agreements with retail partners, said TNR CEO Tim Belton, whose company has partnerships with supermarkets such as Kroger and H-E-B.

Last month, third-place DVDPlay said it would more than double its machines to about 3,200 this year.

Meanwhile, Blockbuster, the largest U.S. video-store chain, closed about 700 of its 8,500 stores worldwide for the year ended Sept. 30 as it invested in its Total Access online-rental service to compete against rental-by-mail leader Netflix. Movie Gallery, which filed for bankruptcy in October, closed about a fifth of its 4,500 eponymous and Hollywood Video stores last year.