Dollar nights gain traction in DVD trade: Kiosks to make up 30% of rental market by the end of 2010

The Hollywood Reporter reports:

Redbox and other DVD-kiosk chains have grown to 19% of the DVD rental market but are projected to comprise an impressive 30% by the end of 2010, according to an industry study released Tuesday.

NPD Group said the current market share of kiosk companies, which collectively form the controversial dollar-rentals portion of the DVD marketplace, compares with a 36% share for Netflix and other subscription services and a 45% piece of the rental market for Blockbuster and other traditional video stores.

Just a few years ago, DVD kiosks represented less than 2% of the rental market. Redbox, co-founded by McDonald's but now 100%-owned by Coinstar, changed all that after it began aggressively rolling out its network of rental kiosks in retail locations nationwide in 2005.

"Consumers are obviously responding positively to the perceived value of $1-per-day rentals," NPD analyst Russ Crupnick said. "And they appreciate the convenience offered by video rental kiosks."

The miracle of competition and deflation.