Blake Thomas is trying to make Santa Monica’s Digiboo Inc. part of a traveler’s pre-flight ritual. He hopes passengers, after buying candy and magazines at an airport shop, will download a movie from one of his company’s kiosks before boarding the plane.
Digiboo has set up its movie rental stations at three airports – in Seattle, Portland, Ore., and Minneapolis – as well as train stations, malls and coffee shops around the country. It’s planning a larger rollout in the coming months.
The minimalist, four-foot-tall booths are a digital take on the Redbox DVD and Blu-ray vending machines that have popped up outside shops around the country. Instead of physical discs, Digiboo rents video files that customers transfer from the machines to their Windows laptops through USB drives. This month the company also released an app for Android that lets smartphone and tablet users download movies over a kiosk’s Wi-Fi network. Thomas said the 20-person company is targeting travelers who want to make an impulse buy for some entertainment and have the freedom from due dates.
“Today our ideal customer is the movie lover on the go,” he said. “It’s for people who want to be able to watch the latest movies away from home and don’t want to worry about late fees.”
Digiboo charges $3.99 for new titles and $2.99 for older ones; alternately people can buy videos for $14.99. (A rented movie can be viewed once within 30 days before it self-deletes.) Since launching the service last year, Digiboo customers have rented 12,000 movies.
Recently Digiboo added TV episodes from popular shows including “Mad Men” and “Big Bang Theory” that cost $1.99 to own.
Digiboo is expanding its service during a volatile time in the home entertainment world.
In the past decade, Redbox and the DVD-by-mail service offered by Los Gatos’ Neflix Inc. have decimated brick-and-mortar rental stores. Hollywood Video went out of business in 2010 after its parent company filed for bankruptcy. A report by market research firm NPD Group shows rental kiosks have overtaken the likes of Blockbuster to be the largest renter of physical discs in the country.
That victory may be short lived as digital rentals popularized by Apple’s iTunes store, On Demand options and Netflix’s own streaming service become significant threats to all disc renters. Digital movies accounted for 38 percent of the overall rental market for the first half of this year, a jump of 5 percentage points from last year, according to NPD.
Billy Hulkower, a tech market analyst in the Chicago office of Mintel Inc., said even a well-known disc renter such as Redbox should be worried about that trend.
“The future is digital delivery if you’re talking about video,” Hulkower said. “It’s a legitimate concern that Redbox is going to lose revenue from disc rentals.”
Tough market
Even as digital delivery expands, Digiboo is facing stiff competition. The most recent figures from Apple claim the Cupertino company rents 150,000 movies and 400,000 TV episodes daily.
Meanwhile, Redbox will be making its foray into the digital rental world later this year when it releases a movie streaming app. The app, which was developed along with New York’s Verizon Communications Inc., is slated to be released on Android and iOS operating systems.
Those services also have a much broader reach than Digiboo. For laptop users, Digiboo movies must be played through a proprietary player that customers install along with their first rental. That player is Windows only, which leaves out Apple users. Thomas hinted that Digiboo is working on a Mac-compatible video player and iPhone app and may release them in the near future.
For the people who can use Digiboo, Thomas thinks smartphone and tablet customers might prefer its kiosk to download a movie rather than a streaming service, as it keeps the traffic off their cell networks and spares their data plans. A single movie can be as much as two gigabytes, which in some cases is an entire monthly allotment of data. And Thomas maintains that transferring a movie over the kiosk’s private wireless network is much more reliable than an airport’s public Wi-Fi.
The rental industry’s shift to digital is one Thomas saw firsthand in his previous job in the home entertainment division of Century City’s Metro-Goldwyn-Mayer Studios Inc. After years of combating the shift to digital distribution, the movie studios have softened their stance and allowed companies like Digiboo to have access to their newest content.
So far, Digiboo has inked deals to distribute movies produced by all the major studios except Walt Disney Co., Twentieth Century Fox and NBC Universal Media LLC. For each movie rented, Digiboo gives a cut of the sale to the movie studios. Executives didn’t give specifics of the deals with the studios but said it is comparable to what competitors pay, which in the case of iTunes rentals is 70 percent of the sale.
Thomas believes the fact that a small company could get studios on board without too much trouble is simply a sign of changing times.
“The truth is, had we started Digiboo 10 years ago it would have been harder, but there’s a greater comfort now among studios for digital delivery and the needs of digital consumers,” he said.
