Your topic Prepackaged Wine Tasting Game | CheapWineRatings.com was interesting when I found it on Tuesday searching for excercise game…

Even as the world changes and technology advances, it seems that some things will always remain the same. People always think of the internet, Youtube and Facebook as the drastically different future. The insight that they’re making their money the same way as traditional media is very interesting.

It has been quite interesting for me to read your first post on the rise (and now significant presence) of the DVD Kiosk concept in the video business. In fact, a few years ago, as a pioneer in this emerging industry, and a younger entrepreneur looking up to successful maverick businessmen like yourself, I fancied on a number of occasion to seek the opportunity to make a case presentation to you and the likes on this matter. But its time had yet to come…

As you said: “The point is that when everyone is looking in one direction, sometimes industry change and profits can come from where everyone is telling you not to look”!

This was certainly the case here. At the time, it was not that easy to convince folks on the true viability of this concept. Specially that most were focused on “hot” & “real” disruptive forces such as the digital side of the video business. While in reality, product cycles and consumer adoption trends make for a much longer timeframe than one might expect for such channels to become “business viable”. And if it wasn’t for the immediate corporate muscle, real estate and considerable capital that was invested by McDonald’s & Coinstar into establishing (without second guessing) the first real enterprise scale DVD Kiosk network in the US (ie. Redbox), this industry would have probably fared the same fate that it did in other markets where all the upstarts were small local operators who lacked the economies of scale and real logistics that it takes to be successful in this business.

The reality is that while the DVD Kiosk concept is primarily considered a “technology” innovation, it is certainly not based on anything new or fancy for that matter. More appropriately, it is a business that is based on non-sexy fundamentals such as optimizing but minimizing capital costs on your basic hardware, insuring reliability, efficient logistics in tech support & merchandising; and of course the video retailing aspect of it which is about delivering convenient and CHEAP movies to consumers…

That being said however, there are certainly some areas that could in due time use more innovation on the technology side within the DVD Kiosk business. For example, as the physical medium DVD life cycle will mature and slowly decline over X number of years to pave the way for more efficient distribution channels (mainly on the digital side), I believe that the power of this concept in providing lower operating costs and promoting lowest priced rentals will make it stronger and thus have it capture an even bigger percentage of the marketshare (albeit in a declining overall piece of the pie that DVD rentals will represent). At that time, with millions and millions of customers regularly using kiosks as their primary physical media channel, innovative kiosk companies will have the opportunity to blend in more advanced technologies, whether it being a hybrid model where users could also download digital content from the same kiosks, or perhaps leverage their customer base and significant “eye-balls” to merge in Internet/Mobile channels in a complementary way…

Today, our smaller yet fast growing DVD Kiosk company (www.iMOZI.com) has been gearing up to have such a general outlook. It took years of hard entrepreneurial work, hard earned organic growth and a dedication to a vision about an unknown concept, but it certainly feels good to finally see the not-so-sexy DVD Kiosk getting its deserved spotlight (no pun intended) in the movie business… not to mention hear it talked about by veteran media players like yourself!

So cheers to the DVD Kiosk’s 15 minutes of fame…. Now I have to go look again where no one is!

Soheil Samimi
President – iMOZI
http://www.iMOZI.com

Keep writing this great blog and cheers.

WW

The concept of being able to go to a video store and interact with others such as Blockbuster might be dying but I think that some still just want to get out of the house.

On the otherhand, I think nobody wants to return the videos or worst get late charges… so the DVD that simply dies after 3 days is brilliant!

Now, your point about limiting options being a successful part of RedBox’s model is true, I believe (why facebook has won vs. myspace, IMO). So Netflix would loose that by offering more. But since they’d be late to the kiosk game, they’d have to differentiate themselves somehow. In some ways they’re kiosks would be more cost effective because they’re not stocking DVDs – they’re stocking MPEG2 files (which could be constantly updated via a simple DSL line) and a bunch of blank disks.

Mark could do something like this with his content. Stick kiosks where his content is most likely to find an audience – American Airlines Center. I bet a chunk of people would purchase HDNet videos of sporting events as they walked in and out of the Center. Especially if all they had to do was walk up, let the kiosk scan their phone and out pops the video.

Convenience + lower prices + simplicity are the elements of a disruptive innovation. Now take those elements and apply them to the job, say a parent wants to get done: family entertainment tonight, after dinner. Solve that job at the same time I’m buying food for tonight’s dinner. [or wait until I get home, switch the TV to input HDMI3, find the AppleTV remove, go to the movie listing, sort through a vast array of movies, find the one I want, hope my code and the network is working, start the download....hmmm lots of risk of less convenience and less simplicity....for this job in this situations.....jobs and circumstances are connected.]

As you said, for a segment of people, it’s actually more convenience to get a movie right outside the grocery store. It’s simpler because there is a limited number of top hits to choose from. More choice adds complexity, indecision and reduction in convenience. Simple because, if there is no line, you are in and out in a very short, predictable time.

Plus there is an element of emotional benefit from RedBox (for the job described above…doesn’t apply to all “entertainment jobs”). A mom or dad can be a hero to the young kids by showing up with a “thing”, (a DVD) of the latest kid movie that the family can watch together. Downloading on AppleTV (rent or buy) doesn’t have the same reaction when you surprise the kids with a DVD in hand and see their reaction. Or if the kids are with you at the grocery store, parents can use the RedBox as an effective reward for the kids behaving in the store. “Behave in the store and you can rent that movie pictured right here when we come out.”

AppleTV and NetFlix and others attack the equation in different ways that works for different jobs in different circumstances.

So RedBox doesn’t have to been seen as coming out of left field if you start the analysis of competitors on the jobs people are trying to get done and the resulting outcomes they expect.

This is also how Netflix could figure out how to compete with RedBox. Deliver better/different outcomes through a Netflix kiosk. Wouldn’t be hard to image one those would be while also attacking the underlying business model of Redbox (which a portion of it depends on late fees).