Jan. 19, 2012 at 2:59 PM ET
Redbox's kiosks are now the leading source of physical DVD rentals in the U.S., and video-on-demand accounts for one out of three paid movie rentals.
"Brick-and-mortar retail stores continue to cede movie-rental market share, as kiosks and digital-streaming rentals become more accepted by consumers," said The NPD Group Thursday.
"There's no doubt that Redbox has been the largest beneficiary of the collapsing brick-and-mortar store rental business, especially with ongoing Blockbuster store closings and the fact that there are also fewer independent stores than the prior year," said Russ Crupnick, senior vice president, industry analysis for The NPD Group, in a release.
Netflix remains the "dominant provider of paid digital movie rentals, posting a 55 percent share in the fourth quarter of 2011, though Netflix's share is down somewhat from the company's peak of 59 percent" in the second and third quarters of last year, according to the The NPD Group.
The research firm said U.S. consumer rental of movies in DVD and Blu-ray disc formats fell by 11 percent in 2011 from 2010. The leader for actual disc rentals was Redbox, which saw its unit volume up by 29 percent in 2011 over the year before.
Some consumers may have been driven to Redbox or video on demand after giving up on Netflix, whose price hikes last year angered consumers.
The company's "share erosion may have resulted from their recent well-publicized challenges with pricing, and from their now defunct Quikster (DVDs-only) experiment," Crupnick said. "However, they are in the process of shifting customers to their Watch Instantly option, so not all of the physical movie rental share drop is a net loss."
The movie rental market is "clearly undergoing a sea change, as consumers become better equipped to access on-demand and streamed movies and are more comfortable with available delivery options," he said. But, he added, "Even so, renting physical discs from now-ubiquitous kiosks in grocery stores and other venues has taken the lead as the most popular movie-rental method in the U.S."
"Now-ubiquitous" is right, for Redbox. You can't, it seems, go a block or past a grocery store or drugstore without finding the red kiosks, almost as prevalent as Starbucks. One down side is that when you're at the kiosk, if something goes wrong during the purchase process, you can be stuck (despite an 800 number to call that often results in a long, long wait) — something you don't want to do standing near a parking lot.