DVD Burning-on-Demand Not So Much in Demand; Players Delay Plans
This story was written by Rafat Ali.
Earlier today we wrote about DVD rental kiosks from Blockbuster (NYSE: BBI) and Redbox's delayed IPO. Now, another variation on the theme, kiosks burning DVDs on demand, are not so in demand, it turns out. After the major studios OK'd the burn technologies last year, everyone expected large scale pilot and some roll outs this year, but it looks like those would now be delayed into 2009, reports VideoBusiness, in a detailed story.
Some of the troubles:
-- Walgreen's has been forced to delay those tests until 2009 after TitleMatch, the kiosk company it was working with, has shut down. TitleMatch, which also had a deal with Chicago grocer Peapod, quietly laid off its entire staff May 30, the story says.
-- Another player, Polar Frog Digital has pulled its kiosks from most retail locations after a year of pilot tests at airports, hardware stores and drugstores as it reworks its business model.
-- Hewlett-Packard, which launched its centralized MOD business, sold its MOD factory but is continuing to offer backend MOD services through Trans World Entertainment..it did a tie-up with on-demand DVDs for *Sony* Pictures Home Entertainment primarily older and more obscure titles. Very long tail, but this isn't a kiosk based service.
-- MOD Systems, which is pilot testing music burning and downloading on kiosks in a few of Best Buy and Circuit City stores, is holding off on including video in its kiosks until it has major studio content.
The issues: as one of the execs quoted in the story says: "old model of burning movies to DVD only wasn't profitable and was a solution for 'yesterday's problem,' rather than addressing the changing way people consume movies and music." These machines also require a significant upfront investment, something smaller companies can't do...others also blame a lack of major studio content for making it difficult to sign on major retailers. Also, more immidiate issue: retailers are generally unwilling to try a new technology in the all-important fourth quarter.
By Rafat Ali