John Michael is about to rent a DVD. But he's not standing in a chain video store like Blockbuster or an independent store like 49er Video in Davis or Awesome Video in Sacramento. Neither is he online, renting from Netflix.
Instead, Michael, a 20-something Sacramentan, is standing in front of a large red box near the checkout counter inside the Safeway supermarket at 19th and S streets. He's about to put his credit card into the DVD Play machine, make his choice, have $1.49 charged to his account and walk away with a rented DVD.
"I shop here all the time," says Michael, and he's using the DVD Play machine "pretty much for convenience."
But, he adds, "they don't have a good selection."
These red boxes – or kiosks, as they're known in the home entertainment industry – have sprung up in supermarkets and other stores throughout the nation. Safeway contracts with DVD Play, while Raley's and SaveMart supermarkets, plus Wal-Mart and some McDonald's restaurants, feature a similar system known as Redbox.
They're the latest, one of the most convenient and least expensive ways to rent DVDs.
With the Redbox system, says Nicole Townsend of Raley's, "Customers can rent a DVD for $1 a day from one of our machines and return it to any Redbox unit – for instance, rent DVDs in Tahoe and return them in L.A. Customers can go to the Redbox Web site (www.redbox.com) and reserve a movie for pick-up. The machine will hold the movie until the customer stops by to pick it up."
In this look at the home entertainment industry nationally and locally, we'll explore the various ways viewers are renting and buying DVDs these days.
We'll also compare different commercial outlets for buying and renting DVDs by focusing on three quite different titles: "Nim's Island," a just-released movie from Fox Home Entertainment starring Jodie Foster and Abigail Breslin that's at the top of the nationwide DVD sales and rental charts; "The Wire: The Complete Fifth Season," an HBO Video release of the Baltimore-based series' final season; and a more esoteric title, "La Strada," the memorable 1954 drama from Italian filmmaker Federico Fellini that came out on a Criterion Collection DVD in 2003.
While renting DVDs from kiosks may be the newest wrinkle in home entertainment – about 10,000 of the kiosks were in operation nationwide at the end of 2007 – they make up only 2.4 percent of the DVD rental business in the United States, according to the 2008 annual report on the home entertainment industry released in June by the Entertainment Merchants Association, an Encino-based trade association for the home entertainment industry.
And even though renting from kiosks is convenient and cheap, "kiosks are not a threat to replace video stores," says Tom Adams, president of Adams Media Research, the Monterey-based entertainment industry research and consulting firm that supplied much of the research for the Entertainment Merchants Association.
Poor selection is the primary reason, says Adams, who also notes that kiosks so far "don't do a lot revenue."
While bricks-and-mortar video stores make up 75 percent of the DVD rental market nationwide (40.6 percent from public chain video stores and 34.7 percent from independent stores, according to the EMA), their biggest challenge has come from online firms like Netflix or Blockbuster's Total Access, which offer subscription rentals through the mail and now total nearly 22 percent of the market.
As a result of this increased competition from online services and a growing propensity for consumers to purchase rather than rent, traditional video stores have seen their rental revenue decline to a little over $6 billion today from about $10 billion in 2001, says Adams.
In our test case of renting three different DVDs, we compared four outlets: the DVD Play machine at Safeway on 19th Street (representing the new kiosks) in Sacramento; this writer's local Blockbuster store in Orangevale (representing chain video stores); 49er Video in Davis (representing independent video stores), and Netflix (representing online services).
Call The Bee's Bruce Dancis, (916) 321-1112.
