Online Video, Kiosks Killing Off Rental Shops

According to the NPD Group, U.S. consumer rental of movies in DVD and Blu-ray Disc formats fell by 11% in 2011, vs. the prior year, and the landscape of retailers has shifted dramatically. The leader in physical-disc rentals was Redbox, whose unit volume increased by 29% year over year; as a result, Redbox's share of DVD and Blu-ray movie rentals rose from 25% in 2010 to 37% in 2011.

NPD's VideoWatch consumer tracker indicates that much of the share gains came at the expense of traditional brick-and-mortar retailers like Blockbuster, whose share fell 6% points to 17% in 2011. Netflix's share of DVD and Blu-ray rentals was flat for the year at 30%; however, in the fourth quarter (Q4) of 2011 the company reached a two-year low of 25%.

According to NPD's VideoWatch Digital tracking service, nearly one in three paid movie rentals (31%) now come from paid VOD options. Netflix is the dominant provider of paid digital movie rentals, posting a 55% share in the fourth quarter of 2011, though Netflix's share is down somewhat from the company's peak of 59% in Q2 and Q3 2011.
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