Today, Blockbuster is basically a dead concept, with Redbox and other kiosk operators taking over the majority of the hardcopy DVD rental territories.  Redbox is still turning a profit off of its cheap and accessible DVD rentals, but its business is shrinking and it seems destined for the movie-distribution graveyard.

(Source – Company Reports)

While Redbox movie offerings are still attractively-cheap compared to many VOD options, the fundamental factor pushing their market share downward is that people are increasingly seeking entertainment on digital outlets like Netflix, iTunes, Hulu and Amazon.

“I don’t think it will hit a wall and people will stop using Redbox all of a sudden,” says Piper Jaffray’s Michael Olson. “But the war they’re waging is one they will lose longer term.”

Redbox lovers can find solace in the realistic notion that their local kiosk will likely be plugged in and profitable for the next several years.  It is certainly most likely though that current users will have to take the grandkids to a museum to simulate their fondly-remembered DVD rental experience.

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