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Buyers Group Looks to Fight Kiosks

8 Sep, 2009 By: Erik Gruenwedel

Alarmed by the rise of rental kiosks such as Redbox, the Video Buyers Group is organizing a PR campaign aimed at educating consumers about the perils of $1-per-day movies for the entertainment industry.

Minneapolis-based VBG represents about 1,700 independent video rentailers nationally, offering insight on distribution, insurance and digital challenges.

For the time being a grassroots effort, the campaign plans underscore the negative impact $1 movie rentals have on a movie industry that has banked on packaged media for a big part of its revenue.

The buyers group is in talks with studios, distributors and even the Screen Actors Guild to elicit support for the proposed print, online and retail campaign, according to John Engen, sales representative with VBG.

“It is devaluing the industry,” Engen, said. “The kiosk is taking the video business down the same path the Internet took the music industry.”

Engen said kiosks were a main topic of discussion at the trade group’s annual convention last month. He said a core group of organizers within the campaign have begun addressing online blogs and sites that herald the advent of rental kiosks.

“Kiosks are basically leaving us two options: Either we can lower our rates and go out of business or not lower our rates and go out of business,” Engen said.

He said the consensus at the convention was the areas of competitive advantage rentailers have over kiosks, including more customer service, copy depth, catalog titles and related value-added services.

One Arkansas-based rentailer said he countered the influx of Redbox kiosks in McDonald’s and other venues by addressing local city councils about the appropriateness of kiosks being able to rent ‘R’-rated movies to minors.

Engen said the group soundly supports efforts by Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment to delay distribution of new-release titles to kiosks 30 days to 45 days after street date.

He said the proliferation of Redbox and other discount kiosks would ultimately affect the value of movies made by studios.

“Either rental kiosks change their pricing or they don’t receive copies day-and-date,” Engen said.

Rob Enderle, principal analyst with Enderle Group in San Jose, Calif., said the likelihood a PR campaign would convince consumers to pay more to “save” the billion dollar movie industry is farfetched. Enderle suggested rentailers aggressively pursue online distribution models that tout superior selection and convenience in comparison to kiosks.

“I expect the success of this [campaign] will be worse than the music industry’s efforts with music downloads,” Enderle said.

Ben Patterson, blogger with Yahoo Tech, believes there remains room in the entertainment retail food chain for both kiosks and independent video stores.

“While I can understand how indie video stores might feel threatened by the buck-a-night DVD, I'm pretty sure there's room for everyone — after all, good luck finding a copy of [Federico Fellini's] 8-1/2 at the Redbox in McDonald's,” Patterson wrote.

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