The old-fashioned video store experience continues to become a thing of the past, according to a new report. The Convergence Consulting Group says that video store rentals will drop to just 13% of the total home video market in 2012.
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Rentals made in a traditional video store such as Blockbuster comprised 20% of the market in 2011.
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In 2012, Convergence predicts that Redbox-led kiosk vending will own 22% of the market, while SVOD services like Netflix will grab 25%, with by-mail subscriptions dropping to 16%.
The Convergence report sums up the situation thusly:
“Kiosk, mail and now streaming rental offer a lower-price value proposition and have radically altered the rental channel, while negatively impacting DVD/Blu-ray/[electronic sellthrough] and encroaching on TV subscription . . . We estimate downloaded movie and [episodic] TV sales represented 4% and 3%, respectfully, of 2011 DVD/Blu-ray/download movie/TV sales.”
Jan Saxton, senior analyst for filmed entertainment with IHS Screen Digest, said confirmed the trend:
“Consumers still love movies, but in these economic times they are looking for the best possible price and the most convenience . . . And so it’s either kiosks or Netflix.”
Do you get a nostalgic tear in your eye as the end of the video store approaches, Insiders? Or do you think the convenience factor of other channels outweighs the simple pleasure of browsing stacks of movies at your local video store?
[via Home Media Magazine]
Interesting,
Having owned an independent movie rental store when first VHS tapes hit the market, it was one of my best lifetime businesses, very profitable, but BlockBuster put me out of business, so now they are the ones who are being put out of business my direct mail and kiosks. Like everything, the lower cost alternative always will win out in the end.
Overhead is the killer, and when a lower price competitor like BlockBuster at the time hit the market, just like what WalMart has done, they put the little guy out of business. Given the movie rental industry is so profitable, those with the lowest prices and lowest overhead will win in the end.
Having researched the current trends, no doubt, people are more price sensitive than ever in this recession, and it is not getting any better. When NetFlix raised prices they lost over 800,000 subscribers, and who gained customers, RedBox, so in time we will see growth in the low cost option offered by kiosk operators.
In time, with the obvious trend and growth potential in the kiosk arena, although RedBox is the gorilla given the market Coinstar already had in high traffic locations, 40K locations may sound like a lot, but there is room for hundreds of thousands more, and that is what we will see as more companies go the kiosk route. It wouldn’t surprise me if NetFlix starts a kiosk push if they don’t want to see what happened to BlockBuster happen to them, forced into bankruptcy.
I see the companies which offer all three avenues as the real winner, direct mail, kiosk and streaming when bandwidth can handle huge demand of downloading movies. They cannot even handle current load for wireless and internet, so this will be the real challenge as I see it. Technology to increase bandwidth capacity is under development, so there is hope, but DVD’s will rule the industry for years to come as I see it. It all comes down to the lowest prices, that is what people want most, to save money. Look at how cable and satellite movie rentals dropped 12% last year, very telling trend.
My solution is to get back in the business with company offering all three, direct mail, kiosks which you can earn and place wherever you decide in your area, plus streaming option which will round out the offering. Knowing how profitable the movie rental business always was, and is, I see this as one of the only recession proof businesses. I use to enjoy watching all the movies released for free, now I can do just that again with Free-FlixsNow concept using affiliate referral model. Interesting times in this industry, and at only $25. a year, or $2.08 per month, lowest prices in industry, should be interesting when launched.
i am a big time movie buff and buy DVDs when i love a movie that i have seen.. kind of sad to see the decline!
I miss the brick & mortar video stores. Redbox is great for new releases and convenience but for older movies I’ve never seen but want to see, I’m finding the only way to do so is to blind buy it – which I regret doing if I end up not liking it.
Sure, I could join Netflix by-mail or streaming, but living in a rural area doesn’t make that feasible. So for now, I’ll continue blind buying movies when they’re on sale or under five bucks and if I dislike it, I’ll just flip them at a pawn shop ( my local one has a trade-in program featuring 2-for-1, not bad for something I didn’t like for something I potentially could like).
I operate an old Movie Gallery store that rented my building. Making just as much as Movie Gallery did in my building as an independent. Small town America still uses video stores in the south and midwest at least.
Some of my best memories as a kid are of browsing the aisles of our local video store. I discovered so many movies that way. Scared the crap out of myself by looking at the pictures on the back of the movies in the horror section and just imagining what the film would be. Blindly renting stuff based on the cover design alone. And even though 95% of my rentals are from Redbox/Netflix, I still like to browse a video store now and again for nostalgia sake. I’ll be sad to see the last of them die off. But I can understand why…
I have Block Buster two out at a time. And the get two free ones in the store when I take them back. $16.50 a month. And that = 16 DVDs for me a month. I also have Netflix online for about $8.00 a month. So for $24.50 a month I have all I want to watch. No more going to the crap shows. With Out of control people and kids. No more Crap PopCorn and Water Cokes.
Got it all right here at home!
With my 55″ wafer thin TV. My DVD’s Laser Disc. And even some VHS tapes..
Home is where it is at!
\ Be well all.