Redbox Dabbles in Game Rentals

Video rental company Redbox is testing videogame rentals in three test cities. The company, which makes use of video rental kiosks around the country, began testing videogame rentals last week in Austin, Texas, Reno, Nevada and Wilmington, North Carolina. The rentals cost $2 a day per titles. The initiative has been rolled out to 150 kiosks units in those regions, according to analysts familiar with the company.

Eric Wold, analyst with Merriman Curhan Ford in New York conducted a survey of kiosk in the target region; he said that the data showed an average of 2.8 video game titles and 3 video game SKUs (platforms) per kiosk.

In a survey of kiosks in Austin, Eric Wold, analyst with Merriman Curhan Ford in New York, found an average of 2.8 video game titles and 3 video game SKUs per kiosk — the latter representing the number of game platforms offered for a single title. Wold said he "was surprised" by the quantity and percentage of titles offered didn’t reflect market penetration of game consoles; only 28 percent of Redbox kiosks renting Wii games despite the fact that the Wii has has the highest U.S. penetration with 28.8 million units. He also found that 39 percent of kiosks held Sony PlayStation 3 titles while domestic market penetration for the PS3 console is 12.5 million units, according to Wold. Xbox 360 games represented 33 percent of the SKUs.

We had hoped to see a larger selection initially when consumers are likely to form initial impressions of the service and determine whether or not they will return at a later date," Wold wrote in a June 30 note.

He went on to say that these tests of videogame rentals has to at least keep up with or outpace video rentals. Some market research would show that videogame rentals tend to last multiple days.

Data about selection aside, this is a simple test to see if Redbox users are interested in having other kinds of entertainment available besides DVDs and Blu-Ray discs. No doubt the company will find that, given the right games, videogame rentals can be quite lucrative. Just ask GameFly.

Source: Home Media Magazine