TORONTO -- Redbox has been piloting its DVD-rental kiosks and plans to make its long-awaited debut in Canada next month, reported The Globe & Mail. A company spokesperson confirmed for CSP Daily News that Redbox has secured agreements to set up kiosks at convenience stores operated by Alimentation Couche-Tard Inc., as well as at Walmart stores.
Hundreds of red movie-rental kiosks will appear across the country in the coming months as Redbox looks to take advantage of the vacuum left by the closure of traditional retail stores, said the report.
The Oakbrook Terrace, Ill.-based company, a unit of Coinstar Inc., has almost 30,000 rental kiosks across the United States.
"[Canada] is the third largest DVD rental country after America and Japan," said interim president Gregg Kaplan, speaking at an investment conference last week. "But at the same time, there is a bit of a void there. … Blockbuster Canada and Rogers Video have either already exited or have announced that they're going to exit. So the brick-and-mortar retailers are already out."
There has been a vacuum in the estimated $1 billion Canadian DVD rental industry since Blockbuster Canada was pushed into receivership last year. More than 400 stores were closed across the country as a result, and Rogers Communications Inc. announced earlier this year it would also stop offering movie rentals in its stores.
The combination of streaming video services such as Netflix and rental kiosks devastated the U.S. video store industry over the past decade, the report said.
There are some kiosks already operating in Canada. Zip.ca has about 100 kiosks in grocery stores, and electronics retailer Best Buy wants to double its machines--which are typically found in western Canadian convenience stores--to 130 by the end of the year, said the report.
But the services were never seriously marketed in Canada and face content licensing difficulties that have diluted their offerings, it said.
"We feel like Canada now is ripe to do this and we feel like it's time for us to go there in addition to what we're doing in the U.S," Kaplan said. "And given that there's already a couple of kiosk competitors and the brick-and-mortar folks have exited, the time is right ... we don't want to lose that opportunity."
Kaplan said that he wants to see about 2,500 kiosks in Canada within the "next few years," but said the company will initially focus on Vancouver and Toronto.
"Historically, a pretty good rule of thumb, what we've seen in other businesses is that Canada can get to roughly one-tenth the size of the U.S. market," Kaplan said. "We're not projecting that yet because we haven't had the experience there, but it feels like it could be sizable."
The company's self-serve kiosks will charge Canadians $1.50 for a standard definition new releases or $2 for a Blu-ray. It will also offer video games for $2.50.
"We set the price points at a level where we think we can get similar demand and profitability," Kaplan said. "The brick-and-mortar competitors, when they were there, were at U.S. kinds of levels. So $4 or $5."
Redbox offers new-release DVD, Blu-ray Disc and video game rentals through its network of self-service kiosks. It has rented more than 1.5 billion discs and is available at more than 35,400 kiosks across more than 29,000 locations nationwide, including select McDonald's restaurants, grocery, drug and c-stores, select Walmart locations and select Walgreens locations.
Coinstar, Bellevue, Wash., is a leading provider of automated retail solutions offering convenient services that make life easier for consumers and drive incremental traffic and revenue for retailers. Its core automated retail businesses include the Redbox self-service DVD rental and Coinstar self-service coin-counting brands. The company has approximately 35,400 DVD kiosks and 20,200 coin-counting kiosks in supermarkets, drug stores, mass merchants, financial institutions, c-stores and restaurants.
As of Jan. 29, 2012, Laval, Quebec-based Alimentation Couche-Tard Inc. had a network of 5,817 convenience stores, 4,225 of which include motor fuel dispensing. It supplies motor fuel to 338 sites operated by independent operators. Couche-Tard's network consists of 13 business units, including nine in the United States covering 42 states and the District of Columbia (primarily under the Circle K flag), and four in Canada covering all 10 provinces (primarily under the Mac's and Couche-Tard flags).
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