A digital rental service is looking to fill the gap left by the demise of video stores by offering viewers the chance to download digital copies of new releases from kiosks scattered in airports and corner stores.
Digiboo Inc., based in Minnesota, has close to 100 download terminals across the United States. The company will begin a Canadian expansion on Wednesday, in Toronto, before moving to other cities. The service is one of many competing to rent movies to consumers, who have seen their options reduced since Blockbuster Canada closed in 2011.
But unlike services that allow anyone with a modem to download a movie at home, Digiboo, which launched in February, is counting on impulsive renters who don't have a Wi-Fi connection and don't want to blow past their data caps in order to rent a movie. "Our target audience is really people on the go," said founder and chief marketing officer Blake Thomas, who leads a team of former movie executives. "A lot of our initial installations focused on airports. In addition, we are focusing on dense downtown locations."
Despite the rise of services such as Netflix, which give viewers greater access to vast libraries of content for a monthly fee, the video rental business in Canada is worth an estimated $1-billion a year. Blockbuster was generating almost half of that revenue.
Competition for market share has been fierce, with some of the best capitalized companies in North America aggressively targeting mobile viewers. Apple Inc. rents movies from its iTunes store, while kiosk-based Redbox intends to add up to 2,500 self-serve boxes through its partnership with Wal-Mart and Loblaw (the company has more than 30,000 boxes across the U.S.).
"We like the Canadian market. It's the third best video rental market in the world, and it's all about having presence and brand recognition, and we're still in the early days there," Paul Davis, the retiring CEO of Redbox's parent company Outerwall Inc., said in a recent conference call. "The selling cycle has been a bit slower than what we first anticipated, but we are beginning to gain some real nice traction … We think, just given the collapse of the brick-and-mortar players up there, that we're well positioned to carve out a nice market share."
Cineplex, Canada's largest theatre chain, is also aggressively expanding into the digital rental space with a host of options for anyone wanting to buy or rent a movie on phones and tablets. "When Canadians think of movies, we want them to think of Cineplex," spokesperson Patricia Marshall said. "Cineplex is uniquely positioned in the digital download market space for three reasons: we have well established relationships with Hollywood studios, we're the first to interact with movie fans in the film release cycle, and we have Canada's top loyalty program for movie goers that rewards them for what they love most – movies."
But its services, and those offered by Apple and other online competitors, require a fast Internet connection and advance planning on the part of the viewer. Digiboo hopes the rapid, no-cost download will set it apart.
"The truth is people are going to continue to use all digital services as they currently do and as the consumer's appetite for digital content expands there's room for everybody," he said. "I'm old enough to remember video stores at every corner," Mr. Thomas said. "It's just obvious that people love movies and with the advances in technology people are rapidly adapting to technology."