Redbox kiosks are the most "old school" way to sell DVDs. Unlike Netflix (NFLX), which markets DVDs through the mail, or Amazon (AMZN) and cable companies, which offer VOD, Redbox has kiosks. Customers walk up to the devices in malls or other stores around the country, put in a dollar, and take out a DVD.
According to Redbox, it had 12,000 kiosks at the end of 2008, but is aggressively adding to that total.The Wall Street Journal reports that, under a new deal with Sony (SNE), the kiosk company will be able to buy DVDs directly from the studio, allowing it to bypass wholesalers.The new partnership has a "bank into the future" aspect to it. Almost all the recent discussion about the next generation for distribution of content has been shaped by how quickly digital distribution will completely replace flagging DVD sales. The notion that kiosks could be a successful, low-tech alternative cuts against the grain of most of the industry's plans.
The Redbox distribution method has some attractive features, the first of which is that it only costs a dollar per DVD. The second advantage, which should not be overlooked, is that many people don't have the hardware or the high-speed internet connections needed to stream or download long movies. Not everyone has or necessarily wants a high-tech living room. Redbox shows that digital distribution may be growing, but it has not completely replaced the demand for a cheap way to watch a movie. Maybe the recession is causing a rejection of the relatively expensive VOD model.
Douglas A. McIntyre is an editor at 24/7 Wall St.