Will DVD rental kiosks ever take off in the UK?

Some retailers were hoping that DVD rental kiosks, as seen in Europe and the US, would be the next big thing to resuscitate a stifled UK rental market, but new research suggests this may not be the case.

Screen Digest has looked closely at DVD kiosks and has found that while they work in the US, the rental market in the UK isn't big enough to support the cut-price business models.

"The concept of rental kiosks was actually invented in Italy about 20 years ago, and was quickly adopted across much of southern Europe," explains Screen Digest Head of Video Helen Davis Jayalath.

"But unlike in the US, European kiosks tend to be operated by traditional rental stores and are seen as an extension of their business – they don't tend to compete so aggressively on price. And there are plenty of markets – including the UK – where despite regular attempts the idea has simply not taken off due to a combination of cultural and legal issues."

But will the idea ever take off? Jayalath is unconvinced, especially in the current economic climate, saying: "We don't believe that rental is strong enough in any European territory these days to support a substantial $1 (or €1 or £1)-a-night business."

Blu-ray boom

This doesn't mean that it is all doom and gloom for the UK's rental business, as the likes of Blu-ray looks set to perk up the 'try before you buy' end of the market.

"Consumers who are considering upgrading to BD may be more inclined to do so if they can rent, as well as buy, the more expensive hi-def discs needed to make the most of it," explains Screen Digest Senior Analyst Richard Cooper.

"By the end of this year there will be 11m European households who own a Sony PlayStation 3 games console – which is one of the best BD players out there. Rental, which is the ultimate 'try-before-you-buy' option, is a great way of persuading them to dip their toe in the Blu-ray water."

The future of disc buying and renting looks rosy, according to Screen Digest, with European consumers likely to be spending as much as €461 million (£406 million) a year on Blu-rays by 2013.

Add this to the forecasted €3.2 billion (£2.8 billion) that is likely to be spent on buying movies and TV series on the hi-def discs, makes the total European BD market in 2013 worth around €3.7 billion (£3.2 billion).