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Catherine Colbert

Netflix aside, Redbox has some lesser-known worthy rivals

by Catherine Colbert | Dun & Bradstreet Editor

August 18, 2011 | No Comments »

By now, even your great grandmother knows what a Redbox kiosk looks like. When you approach your neighborhood grocery store, just look for the line forming outside or the (gasp) idling cars that are double-parked in the fire lane. Thanks to the video rental company’s aggressive expansion from mid-2010 to mid-2011, Redbox boosted its kiosk portfolio by a noteworthy 6,000 units, allowing the company to blanket the nation with 33,000-and-growing little red boxes. The firm’s expansion continues and it’s hot on Netflix’s heels with plans to roll out Internet streaming by the end of 2011. To eclipse its rivals, Redbox needs to do more than just compete with Netflix, GameFly, and Blockbuster. Companies the media don’t talk about have served this niche of the movie-delivery business for years. They could become a serious thorn in Redbox’s side as these handful work desperately to grow their market share in this cut-throat space.

Point.360, headquartered in California, rents and sells DVDs and video games directly to consumers through its Movie>Q retail stores. While this business represents a small slice compared to its lucrative movie-trailer production work for such clients as Disney, Warner Bros., and Universal, Point.360’s entry into renting and selling videos in 2010 is helping to offset temporary net losses resulting from less studio work. The company is dreamily optimistic about its Movie>Q business, seeing opportunities to serve customers who are mourning the loss of Movie Gallery, Hollywood Video, and Blockbuster stores. It doesn’t feel downtrodden, either, by the traction achieved by rivals Netflix and Redbox. It’s banking on the belief that (rather than fetching a disc from a kiosk or mailbox) customers really do prefer a more personal in-store experience. Also, Point.360 is sure that it can keep its rental rates competitive, using its proprietary automated inventory management system that was developed to save space and keep personnel costs down.

Trans World Entertainment’s retail venture For Your Entertainment peddles CDs, DVDs, video games, and software through 440 stores in the same markets as Redbox. It also sells items online at fye.com. Begun as a wholesale music distributor, the New York-based company has struggled in recent years as more consumers choose to download music rather than buy CDs. FYE’s DVD sales also have declined as Internet streaming is becoming a more mainstream (and space-saving) option. However, to its benefit, Trans World Entertainment has reined in costs to survive by halving its store count to a nearly anemic level considering its peak of about 990 locations in 2007.   

Florida’s Global Axcess Corp. is a third competitor worth noting. Its primary business operates about 4,700 ATMs across the US and processes some 1.5 million financial transactions monthly. The more entertaining side of Global Axcess’s business resides at its subsidiary Nationwide Ntertainment, which it formed in 2009 to compete head to head with Redbox. The unit currently operates more than 500 self-serve DVD rental kiosks under the InstaFlix banner. Already established in ATMs but confined to earning revenue from two types of fees charged at each ATM transaction, Global Axcess is looking to the video kiosk business to diversify its revenue while leveraging its existing merchant client base. Through several purchases, the ATM management firm has been adding to its network of mini video stores. A deal it inked in early 2011 with Tejas Video gave Global Axcess more than 260 kiosks, mostly on military bases.

In most news outlets we only hear about the top movers and shakers that are one late-night deal from leapfrogging over the other. But there are lesser-known competitors on the playing field who are worth noting, especially if they have a passion to cater to customers who’ve lost one of their favorite video stores to bankruptcy. With the economy in its current state, there are more staycations to be had — and more movies and games to rent.

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