•Tracking service Rentrak reports that rentals were up 1% in the first quarter of this year, while DVD sales, according to studio reports, slipped nearly 15%.

•Netflix, which rents videos by mail, added nearly 1 million subscribers — the biggest increase in the company's 10-year history. Netflix is shipping an average of 2.2 million DVD packages a day, up from under 2 million at this same point last year.

•Redbox, which offers movies for $1 a day through vending machines, continues to expand. The company plans to open 7,100 more kiosks by year's end, adding to the nearly 13,000 installed over the past six years in supermarkets, discount stores, drugstores and restaurants.

"The 'try before you buy' mentality is coming back because of the recession," says David Bishop, worldwide president of Sony Pictures Home Entertainment. "And at the same time, there are more and more ways to access rental, and that plays into the equation as well."

Some studios fear that rentals, particularly kiosks from Redbox and other vendors set up in big retailers, may be cannibalizing DVD sales. Last year, Universal began withholding DVDs from Redbox until 45 days after their release and later ordered distributors to cut off supplies. The two parties are now squaring off in court.

Source:   http://www.usatoday.com/life/movies/dvd/2009-05-04-rentals-recession_N.htm

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"Netflix continues to focus on our core business, we're absolutely dialed in on that," said Steve Swasey, a Netflix spokesman.

Netflix's moves run counter to its competitors, but that's nothing new. The company started out as a video rental company that saved movie viewers a trip to the store. Its catalog was posted online and it mailed customers their DVDs. It carved out a niche by not charging late fees, an irritant for many video renters. Later, it added streaming movies, a business it is trying to promote so that it can get away from DVDs entirely.

Streaming video "is energizing our growth," Hastings said on the first-quarter earnings call. While DVD sales remain the primary driver of revenue, streaming has helped prop up gross margins and is a primary reason the company is on track for a record 2009 "on all dimensions," he said.

Source:   http://money.cnn.com/news/newsfeeds/articles/djf500/200905041526DOWJONESDJONLINE000396_FORTUNE5.htm

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Excerpt:   Competition among the kiosk sector's biggest players to sign up big-name chains has been fierce. Coinstar, which operates coin-counting machines, joined McDonald's in the Redbox venture in November 2005, investing nearly $20 million. Two months later, the company locked up the local Giant Food chain and its sister banner, Stop & Shop. It signed up Giant Eagle, Albertson's, Supervalu and more than a half-dozen smaller supermarket chains and local restaurants over the next year.

The second-largest player is The New Release, which has about 2,000 locations. The Houston company boasts deals with Food Lion, Publix and Kroger. DVDPlay, headquartered near San Jose, has about 1,200 kiosks and has partnered with Safeway. There are 43 DVDPlay kiosks in Safeway stores in the Washington area.

Supermarkets are attractive to the companies because of their heavy foot traffic and frequent repeat customers. The kiosks are usually positioned after the registers, encouraging shoppers to pick up DVDs on their way out. All three companies said they are exploring other channels, such as convenience stores and gyms.

"We've just scratched the surface," said Richard Cohen, The New Release's chief executive. "We could have our hands full in the supermarket channel for many years."

…

The companies generally provide the grocers with a set percentage of the kiosk's revenue. According to Adams Media Research, kiosks average 49.1 rentals per day and $37,457 a year in revenue.

"They've really done a tremendous job in expanding their locations and building their business," said Sean Bersell, vice president of public affairs for the Entertainment Merchants Association.

Still, kiosks represent a sliver of total DVD rentals -- about 0.9 percent, according to Adams Media Research. Chain video stores continue to dominate the category with 43 percent of the market, while online agencies such as Netflix command about 16 percent.

Source:   http://www.washingtonpost.com/wp-dyn/content/article/2007/04/27/AR2007042702295_pf.html

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Excerpt:   Tan, seeing the potential for a new business venture, purchased a vending machine for the DVDs and worked with the Gold’s Gym in Newport News on placement. His business, DVDontheGO!!, launched in May. He’s taking it slow with one kiosk.

The potential for revenue isn’t so much in the rentals but in advertising opportunities on the kiosks and inside the DVD cases.

"Even though we have the same concept as Redbox, we are different in many ways," Tan said. "We generate income through rental/buy and advertisements. We also have trailers of all the movies."

Source:   http://hamptonroads.com/node/485012

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Excerpt:   Movie Gallery and other video rental chains have been hammered as movies that led to a 19-week box office slump earlier this year work their way into video stores.

"In this business our results are driven largely by the quality and quantity of movie titles, which continue to be weaker than we would like," said Joe Malugen, chairman and chief executive. "However, we believe that this softness is temporary and expect rental demand to rebound in the fourth quarter."

Source:   http://origin.foxnews.com/story/0,2933,165558,00.html

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Excerpt:   However, one of the key characteristics of "newly released" movie rentals is the temporal pattern of demand. Demand is high initially, but then declines significantly (Lehmann and Weinberg, 2000; Dana and Spier, 2001, pp. 236-240). That being the case, a rental chain should replace a movie when the demand for it has declined sufficiently. Hence, a model of the video rental industry, whether VHS or DVD (or even game CDs), should address the issue of the optimal length of time to exhibit the copies of a movie on the shelves for rent (shelf-retention time) jointly with finding the optimal quantity of copies to buy…

As indicated, most of the uncertainty concerning a new movie's popularity is realized before it is released in video. Indeed, L & W (2000) empirically show that the entire demand dynamics of a video movie can be closely predicted.