This might not be the final nail in the coffin for brick-and-mortar entertainment rental stores like Blockbuster (is there anyone else even left?), but the coffin lid is starting to get pretty tight.
Last Friday, DVD-rental kiosk titan redbox started renting video games from more than 21,000 redbox kiosks across the country at $2 a night.
And while some business analysts say the move will provide a short-term economic boost at best, redbox seems to be banking on it. Coinstar-owned redbox had trialed video game rentals in several markets over the last two years, from Florida to Texas, and according to numerous reports (including the LA Times), the company found that the average revenue of dual movie/game machines was 10-15 percent higher than that of movie-only kiosks.
And a 10-15 percent boost across redbox's 21,000 kiosks would certainly be timely. According to PCMag.com, company Q4 revenues were down 2 percent from the prior year to $23.7 million, "partly due to an overestimation that DVD rentals would find a stronger demand among consumers."
The ubiquitous red kiosks will rent Playstation 3, Nintendo Wii and Xbox 360 video games, allowing Coinstar to target the 67 percent of American households that now play video games, according to a 2010 Entertainment Software Association report cited in redbox's announcement of the move.
Now redbox will be, to some extent, competing with Web/mail-based video-game rental leader GameFly as well as Web/mail-based movie-rental giant Netflix.
But "there are more problems with this business model than you can shake a joy-stick at," according to Constantine von Hoffman's "Fun & Games" blog on BNET. Since the most popular games are long-playing epics that take many hours, if not days, to complete (and since GameFly rents games for $10 a month), what the redbox rental strategy amounts to is charging gamers $2 for a one-day trial — when many if not most games offer online demos to do essentially the same thing for free.
Plus, Hoffman essentially says, it's only a matter of time before they're all being streamed online anyway.
Photo courtesy of RebeccaPollard.
