Market Watch

Redbox Unveils Four Convenience Store Site Deals



Redbox announced, on September 16, four new video rental kiosk deployment deals with convenience stores; signing with EZ Mart Stores, Fastrac Markets, Murphy Express and VPS Convenience Store Group (Worsley Companies). The Coinstar subsidiary did not provide information on how many kiosks would be deployed at these chains' locations. EZ Mart claims 300+ stores stretching from Texas to Missouri, Fastrac Markets says it operates 47 stores in central New York; Murphy Express operates 58 stores in 11 Southern and Midwestern states, Worsley operates about 382 convenience stores and truck stops in the Carolinas and Midwest under the names Scotchman Stores, Young's Stores, Li'l Cricket Convenience Stores, Village Pantry and Next Door Stores.

Redbox says it now has deals with 52 convenience store banners nationwide, including 7-Eleven, Circle K, Pantry, ExxonMobil, Kum & Go and Stripes. The company's location count stands at 24,000 and should reach 30,000 locations by the end of 2010; meanwhile rival NCR has 7,000 locations and has a stated goal of deploying 10,000 locations by year's end.

Analysis
The two major kiosk players, Coinstar through Redbox and NCR, have already nailed down most retail chains with 1,000+ stores so now the race is on for the next tier: medium-sized retailers with locations in the hundreds. Redbox has locked up some of the biggest retail outlets including McDonalds, Wal-Mart and Walgreens. NCR follows with Blockbuster Express-branded kiosks situated at the Safeway, Publix Super Market and QuikTrip grocery and convenience store chains.

Redbox and NCR are concentrating on staking out turf at traditional retailers, which are a proven market. It remains to be seen how significant, if at all, tertiary retail sites and non-retail sites such as libraries, universities, transportation hubs and other high-traffic locations will be for kiosk-based movie rental.

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