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Best Buy Canada launches self-branded DVD kiosks

The retail giant is testing the market to see if there's room for another DVD kiosk option.

November 30, 2011

Best Buy Canada is hoping Blockbuster's loss will lead to its gain. The retailer has rolled out more than 80 Best Buy-branded DVD rental kiosks throughout c-stores and Best Buy stores across the country. It plans to have 130 in place by the end of the year. The company may soon deploy them in grocery stores and other popular retail stores with a lot of traffic, according to Martin Caines, director of exclusive brands and new business for Best Buy Canada. Future plans depend on the success of this first round of rollouts.

While some analysts, like Paul Coster of J.P. Morgan, are saying that the DVD kiosk market is saturated, Caines believes the recent closing of brick-and mortar video stores throughout the country have left Canadians holding their popcorn without convenient movie-rental options. Blockbuster has closed all its Canadian locations, and Rogers, another large video store retailer in Canada, has closed the doors to many of its retail stores as well. 

"We felt there was a void left where a customer really couldn't rent movies," Caines said.

Coster isn't so confident, predicting that DVD kiosk giant redbox, owned by Coinstar , will see growth stalls next year, despite the increase of its shares by 17 percent in November.

"We believe the DVD kiosk rental opportunity will be saturated by late 2012," he wrote. "[Sixty-eight percent of households are already within a five-minute drive time of a redbox kiosk, and we note that NCRis looking to shed the Blockbuster Express business segment."

If the status of Blockbuster Express kiosks are any indication of where the DVD kiosk market is headed, Coster's predictions may come true. The kiosks are expected to finish 2011 with a $13 million operating loss this year, a figure that's prompted its parent company, NCR, to seek strategic alternatives for the business.

Best Buy Canada executives, however, don't seem too phased by these events.

"We are always aware of our competition; however there didn't seem to be a large national presence that was going into that business, mostly a lot of smaller entrepreneurs," Caines said.

DVDNow Kiosks Inc., a company that provides kiosks and marketing services to more than 1,100 people operating DVD kiosks as their own small businesses,is Best Buy's kiosk supplier. Although the company specializes in the franchising opportunities, it also sells to a few retailers, like Best Buy, who brand the machines as their own, according to Scott McInnes, CEO of DVDNow Kiosks,.

Besides an extra revenue stream, these retailers use them to create buzz for their brands, McInnes said.

More than DVDs

While Best Buy Canada watches how consumers react to its DVD kiosks, it's also looking at other ways to use kiosks, Caines said. It may even develop some to sell Best Buy products in a similar way that Best Buy America has deployed them in airports.

"We are looking into many opportunities around kiosks. We would like to make it even more convenient for customers to get what they want when they want," Caines said.

Read more about DVD kiosks.