As of May 2011, Debbie and Troy Smith had already expanded their movie rental business to 18 self-serve kiosks after five years of being in business. Now they have nearly quadrupled their business to 69 machines, the majority serving large grocery stores in Pennsylvania, Delaware, and Maryland.
“When we started in 2006, two of our first three kiosks were all in grocery stores. We saw how great the rentals were and that inspired us to expand our business over the years to 18 kiosks,” says Debbie.
The Smiths acquire their kiosks from a company called DVDNow Kiosks, which provides movie rental kiosks as a business opportunity to aspiring entrepreneurs for less than $25,000.
When Blockbuster Express pulled out, it created a tremendous window of opportunity for growth. “One of the first locations we took over was an instant success that made us want to try to do more. Many store owners said the reason their Blockbuster Express kiosks were pulled was because they never worked ??? not because no one used them,” says Debbie.
Their company, called New Release DVD, is an independent business capitalizing on the same industry that landed Redbox parent company Coinstar (CSTR) at number 15 on this year’s Fortune Magazine's 100 Fastest-Growing Companies List. The movie rental business has also been the driving force of the company’s profitability, with Redbox revenue surging 18 percent to $460 million in the third quarter of this year.
The Smiths are part of a league of independent DVDNow kiosk operators who are proving there is room in the market for an alternative to Redbox machines, mainly because the demand for movie rentals on disc continues to be strong from both retailers and consumers. Blu-ray and DVD rentals accounted for 62 percent of U.S. movie rental orders in the first half of 2012, while video streaming made up 38 percent, according to the NPD Group’s VideoWatch VOD report, released August 2012.
When the Smiths started the business they had full-time jobs. Debbie worked in the corporate world using her chemistry degree and her husband was a mold and die designer. Now their full-time job is their DVD rental business. They wouldn’t have it any other way.
The independent advantage – new releases up to 28 days earlier than Redbox
Their kiosks, which rent movies at various fees, may look a lot like a Redbox, but they come with some big advantages. They aren’t bound by the movie distribution contracts of Redbox and Netflix (NFLX) and are able to offer their customers new release movies from Fox, Warner Bros. and Universal up to 28 days earlier.
“When Blockbuster and the other video stores closed, people were left stranded,” says Scott McInnes, CEO and Founder of DVDNow Kiosks, who provides the Smith with the kiosks. “People have set up state-of-the-art entertainment rooms and want to take maximum advantage of their Blu-ray players and large LCD or plasma TVs. Video streaming doesn’t offer the same quality viewing experience.”
DVDNow launched in June of 2006 and quickly became the leading provider of independently operated DVD rental kiosks. Today, with operations in over 16 countries, DVDNow has the largest independently operated DVD rental kiosk network in the world.