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Report: VOD, Streaming to Hurt Rental Kiosks

13 Dec, 2010 By: Erik Gruenwedel

Growth of subscription streaming services such as Netflix and transactional video-on-demand is expected to have a continued negative effect on physical media distribution, notably rental kiosks, according to a new report.

Scottsdale, Ariz.-based In-Stat said growth of subscription services — such as Hulu Plus and Netflix, combined with transactional VOD from Apple iTunes, Amazon, Vudu, Blockbuster On Demand and CinemaNow — will contribute to a drop of $4.6 billion in physical media revenue through 2014.

At the same time, digital revenue will increase from $2.3 billion to $6.3 billion through 2014.

“The convenience and utility of online offerings are simply too compelling,” said principal analyst Keith Nissen. “Online rentals permit the selection of any movie or TV program from [a vast] VOD library. Ultimately, it will be impossible for physical disc kiosks [Redbox and Blockbuster Express] to compete with the in-home or in-store download-to-rent business model.”

Indeed, kiosks now represent about 25% of home entertainment revenue, according to Redbox parent Coinstar, while digital accounts for about 20%, according to DEG: The Digital Entertainment Group.

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