Video Rental Stores On 'Life Support'

Redbox-The end of the video store is nigh. According to the NPD Group, consumer rentals of DVD and Blu-Ray movies fell 11% in 2011, compared with the previous year. And those that were rented came from Redbox, which increased its market share to 12% over the year.

In most metro areas, [the video store is] on life support at best,” Russ Crupnick, senior vice president of industry analysis for NPD, tells Marketing Daily. “I think Blockbuster’s latest move to close a lot of stores really puts an end to the video store as we know it.”

According to NPD, Redbox’s unit volume increased 29% in 2011, and its share of DVD and Blu-ray rentals rose from 25% in 2010 to 37% in 2011. Many of these gains came on the back of Blockbuster, whose rental share fell 6% to 17% in 2011. Netflix, which famously gaffed in its attempts to get out of the DVD and Blu-ray rental business during the year, was flat at 30% (although the company’s share fell to 25% in the fourth quarter).

“Redbox is the one bright spot in growing both in types of volume,” Crupnick says. “Their footprint is growing, and so consequently is their share.”

Not all of Netflix’s fortunes are bad, however. The company is still the dominant provider of paid digital movie rentals, commanding a 55% share of those rentals in the fourth quarter. In total, nearly a third of all paid movie rentals are coming from video-on-demand services, a number that is likely to grow as more connected devices hit the home.

“As more people get connected TVs and devices and so on, you’ll see Netflix rebound for that,” Crupnick says. “They’re the only game in town when it comes to [the Watch Instantly] plan.”

“The movie-rental market is clearly undergoing a sea change, as consumers become better equipped to access on-demand and streamed movies and are more comfortable with available delivery options,” he says. “Even so, renting physical discs from now- ubiquitous kiosks in grocery stores and other venues has taken the lead as the most popular movie-rental method in the U.S.”

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3 comments about "Video Rental Stores On 'Life Support'".
  1. Steve Lundin from bigfrontier , January 23, 2012 at 7:31 p.m.
    I guess "plastics" has finally run its course!
  2. Karl Greenberg from MediaPost , January 23, 2012 at 10:01 p.m.
    I'd be interested if there isn't still a niche market for video stores, particularly ones that focus on indie and imports. We have such a place near us and it seems to be doing fine
  3. Jen Knoedl from JenChicago , January 24, 2012 at 6:15 p.m.
    Any stats on how YouTube's video rentals are going?