Blockbuster Express/Groupon Deal Undermining UltraViolet?

12 Jan, 2012 By: Erik Gruenwedel

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While home entertainment studios at this week’s Consumer Electronics Show in Las Vegas displayed a united front in support of packaged and digital media sellthrough via cloud-based UltraViolet, Blockbuster Express is quietly offering rentals for loose change in select markets.

Since last year, Express kiosks — which are owned and operated by NCR Corp. — has partnered with Groupon to offer consumers five $1 rental vouchers for $2 for a limited time in select markets. Groupon is a deal-of-the-day website targeting local and major markets in the United States and Canada.

The vouchers, which must be used separately and do not apply for Blu-ray Disc and Hot List titles, can be used for DVDs renting from $1 to $3 for the first night, depending on the title. The result is that Express/Groupon rentals can be had for as little as 40 cents per day when factoring in sales tax, according to BTIG Research analyst Richard Greenfield, who first reported the deal.

A promotion last quarter in Atlanta attracted more than 25,000 users, while ongoing promotions in New York and Los Angeles have attracted more than 1,000 users each, according to respective Groupon/Express links.

Greenfield questioned the impact loss-leader marketing has on consumers’ mindsets regarding ownership of packaged/digital media going forward. As consumers increasingly are subjected to low-cost rental options, such as kiosks, transactional and subscription VOD, the value of content ownership erodes.
 
“While loss-leading DVD marketing is not in of itself bad for the movie industry (no impact on what studios are being paid), movie rentals marketed for as low as 40 cents a day is clearly not a positive for anyone but consumers,” he wrote in a Jan. 12 blog. “The cheaper and more convenient rental becomes, the greater the pressure on DVD sales will be (hard to imagine consumers buying movies in the future).”

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