By Davis Freeberg
Jun 15 2005 : DVD rentals in the US totaled USD 5.7 billion in 2004, according to the Digital Entertainment Group, and kiosks are becoming the latest delivery channel for the movie rental business. Just recently McDonald’s announced that it would expand its DVD rental kiosk pilot from an initial 100 locations, to over 1,200 by end-2005 and will work with major grocery stores to facilitate returns. McDonald’s is betting that customers will visit its restaurants to pick up food and a movie, with those returning a DVD the next day, likely to purchase more food in the same trip to the store.
Credit and debit cards can be used to rent movies from McDonalds’ kiosks, and customers can return the DVDs at grocers such as Smith’s Food & Drug and Stop & Shop, although this list is likely to extend in the near term. McDonald’s subsidiary Redbox is determining how investment and revenue should be split for the DVD rental kiosks, which will stock 500 titles at a time. If customers retain a DVD for more than 25 nights it is theirs, as they will have paid USD 25 at that point, and McDonald’s initial projections for the venture have to date exceeded expectations.
With 80 per cent of US households predicted to have at least one DVD player by end-2005, up from the current 73 million, retailers can install movie rental kiosks at their premises to increase foot traffic at their stores and establish new revenue streams. Gas stations, supermarkets, mass transit stations, shopping malls and quick-serve restaurants are suitable high-traffic locations for kiosk-based DVD rentals. Apart from allowing retailers to compete with movie rental stores, DVD kiosks offer convenience in allowing consumers to make only one stop before watching a movie.
