Considering how much I’ve written about DVD kiosks, some may be surprised that I recently made my first Redbox DVD rental. I was at the grocery store last week and saw that the kiosk offered the most recent Indiana Jones movie. Indiana Jones has always been a favorite of mine, so on an impulse I rented the DVD. I probably would have rented from Redbox sooner, but between TiVo, Netflix and Internet movies and TV shows, I’ve had no shortage of content and couldn’t justify spending even a measly buck.
The entire rental process was very easy and only reinforced my belief that Redbox will be wildly successful with their business model. In fact, I’ve also noticed that 7-11 has even begun testing Redbox at their stores. I’m not sure if it was the convenience of using a machine instead of dealing with long lines and surly video store clerks or the convenience of being able to make a rental as I was finishing up my grocery shopping, but now that I’ve gotten a taste, I’m sure that I’ll be back.
While it would be hard to improve on the kiosk experience, in thinking about my own entertainment needs, I realized that there is one area of the kiosk market that is still being ignored. When it comes to DVDs, there have been a number of firms who’ve thrown their hat into the kiosk ring, but so far we haven’t seen anyone introduce a kiosk system that dispenses video games.
As a casual gamer, I tend to prefer purchasing my games over renting, but every now and then I end up buying a bomb and get upset that I’m out $60 for a weak title. When it comes to movies, I have no interest in watching the same one over and over again, but I could play a video game for a year and still get just as much enjoyment as the first time I picked it up. While the cost of video games would be higher, I have to imagine that there would be a lot of people like myself who would love to be able to rent a game and keep it, if it happens to rock. In fact, if Redbox (or Gamefly, Gamestop or even [shudder] Blockbuster) introduced a rent to own kiosk system, I’d probably start buying 100% of my games from them.
Because video games tend to appeal to a more niche audience, it would be harder to introduce these kiosks in places like grocery stores of coffee shops, but I do think that companies like Burger King would love to have junk food loving adolescent males visiting their stores on a regular basis, so that they can check out (and return) the latest gaming titles. The extra cost of the video games would mean that they’d probably need to be charging closer to $3 a rental vs. the $1 bargain that Redbox offers for movies, so it’s possible that kiosk operators would see less demand for this type of service, but I imagine that the sell through rate would be significantly higher, going a long way towards making this idea economically viable.
Another issue that a video game kiosk would face, would be having to stock multiple versions of a game. When it comes to DVDs, a single standard allows you to play your movies whether your DVD player happens to be made by LG or Toshiba, but with video games, you’ve got Sony, Nintendo and Microsoft all battling for the living room, which would mean that you’d have to carry less titles to handle more formats or you’d need to have a company like Sony build kiosks that would exclusively support just PS3 games, even if it meant reducing the pool of potential customers.
While a video game kiosk would have some challenges, I think that most of these could be easily solved. I’m not sure why we haven’t seen anyone come out with a product like this yet, but I believe that there is a great market opportunity for the first one to make a move. Currently, it takes about 9 months for a Redbox kiosk to completely pay for itself. Even if it took twice as long for a video game kiosk to pay off, it’d still make an incredible investment for most businesses, even before you consider some of the extra benefits like driving more traffic to the retailer. I’m not sure whether or not someone will seize on this opportunity, but if they do, you can bet that I’ll be a customer. While I may have more then enough solutions when it comes to getting movies, getting a video game can still be a hassle.
What do you think, if someone allowed you to rent video games from a kiosk for $3 a day (or buy them for $50 – $60), would you be interested or is this just a niche market for people too lazy to drive to Gamespot?
Davis Freeberg is a technology enthusiast living in the Bay Area. He enjoys writing about movies, music, and the impact that digital technology is having on traditional media. Read more at Davis Freeberg’s Digital Connection.
Funny you should write this… after traipsing all over town looking for a Blockbuster store still in business to pick up the new Prince of Persia (Xbox 360), I wondered why my local GameStop doesn’t rent video games? They’d do killer business with a video game kiosk and wouldn’t cut into existing sales – in fact, I think they’d increase sales. Especially since they sell used games and kids will be notoriously late in returning these things – good for some extra cash. But I wonder how a large teen demographic would care for the rental discs, versus mostly adults renting movies?
Gamefly’s mail rental service has been good to me the last few months. I, too, am a casual gamer and I have a limited attention span – so all my games are rentals. I have the two disc plan, something like $25/mo. So one game stays Call of Duty and the other rotates, currently Gears of War. But for instant gratification, I’m in favor of a gaming rental kiosk.
Because, after not being bought by Google, Valve is willing to license its Steam technology to any game title publishers that want it – eliminating the need for a kiosk ( and physical media for that matter )?
http://store.steampowered.com/about
I checked out the RedBox web site and got a code for a free rental.
Call me lazy (YOUR LAZY!!) if I have to choose between going out of my way to drive back to Hannafords to return a DVD so I don’t have to pay that extra dollar, or walking out to my mail box. I’ll go to the mail box, Netflix wins.
I don’t really see the appeal of RedBox, but that might be because I live one minute away from a Blockbuster store and have Blockbuster Online too. Although, since I’ve had VUDU, my BO plan has been mostly on hold and haven’t stepped into Blockbuster either.
To add to what Tim said, RedBox feels like an anachronism in this -by-mail age.
@ Todd — Steam is PC-only so it won’t work for consoles right now.
Ivan, Tim – Redbox isn’t for us. It’s for the people who still grudgingly visit Blockbuster. If my mom’s grocery store had a Redbox kiosk, I bet she’d watch a lot more movies. She’s not doing downloads and, it must be genetic, because I don’t think she can stomach visiting Blockbuster either. Then again, my pal Jason is highly technical and uses Redbox instead of Netflix. Though he has a few kids – wonder if that changes things. I keep trying to get him on Netflix so he can rent entire seasons of shows instead of trying to juggle numerous series on his limited DISH Network DVR hard drive(s).
Todd, Ivan – Gaming consoles don’t allow you to just burn games for playback. I mean you could hack your device, but there’s some code signing or something going on. Though maybe the big three (NOT Detroit) will enable modern game downloads instead of these classics (retreads?) and indie developers.
My reference was to Valve’s willingness to license Steam for use by whomever.
I am aware the Sony and Microsoft have an inexplicable devotion to re-inventing the wheel and building what already exists in house ( vendor lock! ) but there is nothing stopping them from using steam to beam games into the PSP4 and xbox 3. In fact, given the cost savings of abandoning physical media and distributing it, MS and Sony will do just that.
I reject the “Grand ma won’t down load her games, she wants a kiosk” – any Grand ma kicking your ass in Halo 3, talking trash as she wins the death match, is more than capable of using something like Steam.
$3 a day is pretty steep, especially considering Blockbuster rents games for $5 for about a week, and no late fees (this policy got me through the Crackdown-required Halo 3 beta). I think if the pricing was right, and game studios could get a percentage of the rental revenues to help them get behind the idea, then it could be a real success.
And there is no way that either Microsoft or Sony will license Steam when they’ve spent loads developing their own digital distribution back-ends and community services.
Random, my Blockbuster rents PS3 and Xbox games @ $8.99 for 5 days. PS2 and Wii are a buck or two cheaper. I did just find out about the late fee grace period. She said I could rent it but didn’t need to return it for some crazy number of days like 15 or 21 before being penalized.
I started using RedBox when I was traveling for work and was in a small town with no Blockbuster. You can sign up for codes for free rentals on Mondays. You can actually get as many free rentals as you want as long as you swipe a different card for each one..
I missed this discussion yesterday, but thought I would weigh in on it now…
For those who don’t know me, I run the “Inside Redbox” blog (www.insideredbox.com), so analyzing and writing about Redbox is my specialty.
Like Dave said, Redbox has a particular market and it is not the long-time Netflix user. (Although, I personally use both Redbox and Netflix, but mostly for Netflix streaming.)
If you always have a large number of rentals on-hand via Netflix, then you probably don’t care about getting the latest release on day 1, or impulsively renting a movie for the night. And, if you do, I am willing to bet you run to your local movie rental store to satisfy the impulse.
I do not think Redbox is that inconvenient for most people, especially if they live in area where it is well-established. Most people leave the house everyday to go to work, and a McDonald’s or grocery store is probably a quick stop for them. Personally, I have 5 Redbox locations within a mile of me, and 10+ within 2 miles. Not very inconvenient at all.
From the standpoint of cost, Redbox beats all other options hands-down. With it only costing $1/nt – and with an abundance of free promo codes – the savings can add up fast.
Davis, I am surprised you hadn’t tried it before now, with all of your commentary about it. Now, regarding your idea of a “Redbox for video games”, I think it is quite plausible.
$3/nt is probably a bit steep, though. But perhaps $2/nt, or even $3 for the first night, $1.25 each additional night would work.
Those who rent video games are not looking to return them the next day (unless they don’t like the game), so the per rental revenue will definitely be higher than what Redbox gets with movies. Ideally a 1-week rental would cost no more than $10.
The idea of “rent-to-own” is an interesting one, though, and could work if the model was just right. I would likely buy more games with a model like that, too.
However, I do think it is a much harder market to crack, as impulse isn’t as big of a factor, and GameFly works well for many gamers. Also, with the ability to buy used games for cheap, I think I would just as soon buy and resell than rent. But, I am not much of a gamer, so I don’t know.
Great article, though, and food for thought. Let me know if you want to guest blog at Inside Redbox sometime. Also, I will be writing a post about this, so you can see more thoughts there.
By the looks of it, this may be one of those posts where your individual replies need to be “pre-screened” and approved before actually being posted… hopefully not. The video game kiosk idea is an excellent one. Video game “genres/titles” can be described as appealing to niche audiences, regarding the amount of consumers who would ultimately make or brake a video game kiosk attempt. That being said, “Video games” in general, no longer can be labeled as niche or grouped in to a subsidiary classification under home/personal media and entertainment. There is no doubt that a video game kiosk would succeed at the same levels that “RedBox” DVD rental kiosks are currently experiencing. It all comes down to the initial rental price/rental length period. There’s no way it would work at $3 a day for video game rentals, especially when the Blockbuster in my northern NJ town charges $6.41 for a 5 day wii/ps3/xbox360 game rental… and that includes tax. Davis Freeberg, the original poster of this discussion had it a little wrong regarding the price of a rental and the success of a game kiosk. The extra cost of a video game (being approximately between $40-$60) wouldn’t force the rental price of a game to $3 per rental. Yes, video games cost about $30-$40 more to buy than your average $15-$20 DVD. When dvd’s & video games are purchased in bulk by Blockbuster, Hollywood Video, Gamefly(online), etc…etc…etc… from distributors, they don’t pay anywhere near the same retail price that little Johnny would pay down at the local Walmart. Throw in a few “exclusive release” contracts with gaming companies, sell advertising space on each kiosk, get the discount from buying in bulk, along with the fact that for the major majority of the time all of these games that are in the kiosk, have been purchased ONLY once (and will continue to earn money for the life of the game, which will be far beyond the original discounted price). Considering all of that, a video game kiosk would be a huge success for any company who knew how to put it all together.