The movie kiosk industry in North America was pioneered by DVDPlay in 2002, a startup in Los Gatos, California, and it really ignited in 2004 when three national retailers tested the business concept. Those retail names were Safeway (nation’s 3rd largest grocery chain with nearly 2,000 stores), Hollywood Video (the # 2 video rental chain), and today’s industry goliath- Redbox (then an operating subsidiary of McDonald’s before being acquired by Coinstar).
The Safeway and Hollywood Video test pilots were run in the San Francisco Bay Area by DVDPlay, and Redbox ran a 160 store market test in Denver using DVDPlay machines, software and support. The tests were wildly successful and movie kiosks immediately became the “must-have” next big thing in retail. There were M&A discussions among the pioneers and it was an interesting and exciting time to be in the business. Ultimately, Redbox went its own way, producing its own machine and DVDPlay, after building a national network in the U.S. and regional networks in Canada, would be acquired by NCR years later. (In the latest twist, NCR’s kiosk business, “Blockbuster Express”, was just sold to Redbox-Coinstar. So, in effect, Redbox ended up owning DVDPlay in the end.)
As a story of business success and industry disruption, movie kiosks rank near the top. The industry exploded and in a little over six years grew to approximately 40,000 operating kiosks and $2 billion in revenue, with Redbox completely dominating the industry, exclusively serving large stores and chains. Along the way, all three of the largest national video store chains filed bankruptcy, with Blockbuster still barely surviving. They just couldn’t compete with the compelling combination of cost, convenience and coolness.
Seeing the success of the business, new sellers sprouted up to market DVD kiosks, with most manufactured overseas, e.g., Korea, China, Italy.
While our Founder was involved in a different Automated Retail pioneering concept he watched the movie kiosk industry evolve. Our opinion was that there were real shortcomings in what was available in the market. Machines were too limited, unimaginative, too big, not aesthetically appealing, often expensive, etc.
So, in 2009, the development was started on what is today’s R3 kiosk, with the goal to create a system so innovative that it would be like the iPod of an industry filled with cassette player-like kiosks. The kiosk was launched to rave reviews at the CES show in Las Vegas in January, 2010.