With a few initiatives already under way in the last year from redbox and NCR Blockbuster Express, are sell-through DVD Kiosks a good idea?

While their impact on the market is most likely not going to be as dramatic as the kiosk concept was for the rental market, there are certainly productive uses and benefits to be leveraged from the automated retailing of packaged media (i.e. "sell-through kiosks).

Most of NCR's Blockbuster Express DVD kiosks already have the technical ability to dispense a movie in its original packaging and the company has made recent agreements with studios such as Universal to test sell-through as part of an approach to "give their customers the flexibility and choice they want in their entertainment purchases."

Two years ago, Coinstar launched Vidigo, which is basically a new kiosk brand, alongside its already famous redbox kiosks. The Vidigo kiosks are quite similar to the regular redbox machines in overall size and design but are black and branded differently. The initial testing is quite limited in terms of number of units installed and geographical reach. However, it certainly displays a willingness by Coinstar to also explore this segment of the market.

Why sell via kiosks?

It's relatively easy to assume that at least some percentage of customers conducting the millions of rental transactions on kiosks nationwide might be interested to buy a movie as well. And as we know already, the DVD kiosk concept, and redbox in particular, has faced significant challenges with many Hollywood studios in the past. This is understandable since from the studios perspective, what drives their business is a higher amount of discs sold. Hence, correctly or incorrectly, cheaper priced rentals obviously do not seem to comply with that objective. Therefore, the idea of leveraging kiosks to drive more sales of packaged media might be a way to further warm up the studios to some of the benefits of this technology. In fact, previous studies by redbox seemed to indicate that the average redbox renter purchases the same (if not more) amounts of DVDs than non-customers. This can make sense, since many value-driven customers would buy a movie only after watching it and evaluating a first time (ideally for as cheap of a price as possible!) and then decide if they like it enough to purchase it. In that sense, kiosks designed to be capable of handling rental and sell-through could give them a good vehicle to conduct this process.

Another way to look at this concept is through a retailer's perspective, with the primary idea being a bid to preserve shelf space and valuable store real estate via a more productive way to give the physical media to the consumers. Additionally, theft of higher-priced content (such as games for example), or alternatively the inconvenience caused to customers with a "behind a locked display" merchandising method, are also important factors to keep in mind when evaluating the benefits of sell-through kiosks. In that sense, automated retail technology allows a retailer to grow their product offering while diminishing the shelf space used!

Therefore, it is not surprising for us in our daily business enquiries and consultations to see a growing number of projects under way with various retailers focusing on this next stage in the evolution of the self-service industry!