Troubled American video rental firm Blockbuster Inc. may have more competition than previously thought of. The well-known movie rental and retail firm has faced intense competition over the last three years, battling video rental kiosks for control of the home entertainment market.

With two rental kiosk services expanding into America’s Deep South, the retail movie rental firms may finally end up losing their position. Revenues have been down for two years at Blockbuster, with competing companies closing branches and entering bankruptcy as the year has progressed.

Of course, movie rentals certainly aren’t the only area in which self-service kiosks are succeeding. The travel industry has cut spending, and often staff quotas, by installing self-service check-in units at airports and railway stations across the world. Kiosks are also popular in retail, helping large chain stores and independent businesses improve customer service and boost returns.

With a greater number of businesses experimenting with alternative customer service and sales strategies, it seems inevitable that kiosks will become more common in the marketplace. Retail experiments have been largely positive, both for businesses and their customers, indicating that self-service and customer-driven shopping is here to stay.

Blockbuster, once the world’s largest chain of home video stores, plans to close upwards of 500 locations across the United States. A necessity due to lowered profits and pressure from net-based video rental services, the once-successful company plans to lower their operating size and focus on high quality store placements and retail outlets.

Alongside their decision, American DVD rental kiosk company NCR plans to capitalize on the wide open rental spaces. Their ‘Blockbuster Express’ DVD kiosk chain – a highly profitable business which licenses Blockbuster’s name directly – plans to operate in areas left without a Blockbuster rental outlet.

The DVD kiosk chain claims that business would resume as normal if Blockbuster were to go bankrupt. Citing their licensed brand name, the kiosk chain noted that their business is operated independently from Blockbuster, sharing only their marketing materials in order to receive greater levels of customer interest.

Los Angeles rental chain Movie Gallery filed for Chapter-11 bankruptcy earlier this year. With a range of independent and franchised rental outlets struggling to remain profitable, the expansion of kiosk-based rental services could be good for studios, and of course, for consumers.

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With stiff competition from 2009 sensation Redbox, Blockbuster CEO Jim Keyes said yesterday that the future of the Dallas-based DVD rental company hinges on its ability to position the brand across multiple distribution platforms – or it might not be a happy ending for Blockbuster.

“The next 12 to 18 months are going to be very challenging,” Keyes said. “We are building a multichannel platform approach and at the same time we have brand new competitors (namely Redbox and Netflix) certainly taking some of the demand out of the market.”

“The great opportunity for Blockbuster is to adapt to the different use occasions, because that’s what these kiosks represent,” he said.

The CEO said Blockbuster has the option to close additional stores, a strategy he said the media blew out of perspective last year when it focused on the closure of 1,000 stores through this year while failing to mention the addition of 10,000 Blockbuster kiosks.

“The net increase for Blockbuster’s presence in 2010 was actually 9,000 additional points of presence, via kiosks,” Keyes said.

Movie-rental giant Blockbuster has rolled out its plans for next year, which will see them go touch-screen kiosk crazy!

They’ll be throwing money at their new Blockbuster Express campaign with an increased amount of automated kiosks as well as maxing out their Blockbuster on-demand digital streaming offering.

At present, their physical points’ presence stands at 2,500 Blockbuster Express branded kiosks and by early 2010, they’ll be unleashing their first 24-hour automated retail store.

James Keyes, CEO of Blockbuster, says: “We are working hard to take the multi-channel approach to the next level by providing the customer with flexibility, control, and ease-of-use. Through our planned integration of stores by mail, vending, kiosks, digital services, we intend to utilise a centralised customer database to realise supply chain efficiencies and ultimately to deliver a superior customer experience.”

Over the past 12 months the DVD rental industry has been at war with major entertainment corporations about the pricing of renting movies to the public through kiosk systems.

Many of the major entertainment corporations like Fox and Warner Brothers have tried to hold back on the delivery of rental DVD kiosks to companies like RedBox due to the price being just $1 per rental, as they don’t see the benefit to them.

Now the competition is on between the rental companies who are competing to offer the best deals to their film loving fans.

This week Blockbuster has announced the rollout of 2,500 Blockbuster Express $1-per-day movie rental kiosks through the end of the year, which includes partner/owner NCR Corp. acquiring content, not through Blockbuster, but from DVD distributors and third-party retailers.

Speaking at a recent Pali Capital conference call, Blockbuster CEO Jim Keyes said the Dallas-based No.1 DVD rental service is receiving a license fee (from 1% to 10%) for use of the Blockbuster name and that NCR is supplying Express kiosks with content acquired through distributors such as VPD and Ingram Entertainment and retailers such as WalMart.

Some of the biggest summer box office sales are due to be released onto the high street over the next few months, and sparks are already flying. Entertainment corporations, Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment have implemented 28-day, 30-day and 45-day windows, respectively, for their new-release product distributed through kiosks.

“For Blockbuster, that is a real consumer conundrum,” Keyes said. “How do you present the brand value that you want the brand image that you want and constantly disappoint customers?” 

The CEO is looking into various ways of gaining the right brand image by changing the price (from $1-$3) for new-release content, which represents 80 per cent of Blockbuster’s business.

“[We are] proactively working on diversifying our content,” Keyes said.

This kiosk war between the multi-national companies proves how fast kiosk deployment is growing in the current market. As businesses try to reduce staff costs, they are also looking for new ways to improve customer experience, hence the installation of DVD rental kiosks in supermarket and retail stores.

However, the battle between the entertainment corporations is a prime example of how many companies are reluctant to adapt to the current economical climate and the need for convenience.

While many DVDs sell at cheaper prices, the top selling box office films still price in at around £13 which is expensive in this day and age and don’t meet consumer requirements.

The move to a kiosk fulfilled environment is still a long way off as major corporations need to adapt to the consumer market but as this begins to happen, then the move will be a lot quicker and beneficial for all.