NPD Group: Video-rental kiosks on the rise

PORT WASHINGTON, N.Y. Video-rental kiosks are receiving increasing attention from consumers, which is leading to more competition for consumers among traditional video rental stores and subscription rental services, according to new research by the NPD Group.

While traditional store rentals still account for the greatest share of video rental turns among U.S. consumers today, kiosk rentals are experiencing more growth than either subscription services or store rentals. Through the first half of 2009, the share of rental turns (i.e., the number of videos rented by consumers) reached 19% for video kiosks like Redbox, compared with 36% for Netflix and other subscription services, and 45% for Blockbuster and other traditional brick–and-mortar video stores.

According to NPD’s VideoWatch service, in the coming months both subscription services and traditional video retailers will experience even more competition from kiosks, which are becoming more ubiquitous in grocery stores, mass merchandisers, and quick-serve restaurants. Even so a primary consumer appeal for subscriptions and store rentals is their depth of title selection – a key benefit that might help mitigate the increased competition from kiosks, which offer a more limited list of video titles.

If current kiosk-category expansion plans are implemented, NPD anticipates that video rental kiosks will make up nearly 30% of video rentals in the U.S. next year. “Consumers are obviously responding positively to the perceived value of $1 per day rentals, and they appreciate the convenience offered by video rental kiosks,” said Russ Crupnick, VP industry analysis for NPD.