Yeah, I was wondering how this article could not mention Redbox. According to their website[1], they have 35,900 boxes nationwide. The rise of Redbox surely had to have impacted Blockbuster's business.

[1]: http://www.redbox.com/facts

It may not be obvious until you look closely at the pictures, but they're environmentally hardened enough to be placed outside (under an awning, no doubt more for the customer's convenience). Avoiding having to fight for precious indoor retail space likely makes a big difference, and the one I'm most familiar with is now quite a bit bigger than the one previously on the inside (albeit a replacement was forced by Mother Nature).

My father rents from it very occasionally, he finds it a lot more convenient than old video stores since it's at a place he goes every few days, and their business model works for him whereas I don't think Netflix's does.

They've started to crop up around all the gas stations and most of the chain stores around here. You can usually find one in any given Walmart, although they mainly seem to be targeting the gas stations currently.

I do wonder at what point the overhead of stocking the machines exceeds the income earned by having one conveniently located to pretty much anyone. Can they afford to keep them stocked with all the latest videos when they have one at every gas station and Walmart in a state?

On a related note we recently tried out the new redbox streaming app on the PS3. It was not a... smooth... experience. Errors galore, images failing to load, and actually getting the video you bought to play is pretty much a roll of the dice. I think their servers were woefully unprepared for the load they were subjected to.

If the design of the system is good, the overhead of stocking is going to be cheap. I mean, communications to the box says "put these discs in these locations", the guy opens the box pulls out that "tray" or whatever (many possibilities here) and replaces it with another that's also been computer and roboticly stocked, you're done.

Maintenance is a bigger unknown to me, but seeing as how they're in their 3rd? generation, they seem to have that under control. Capex could be the big one, those machines and their DVDs aren't cheap ... but they've been keeping this game going for quite a few years. A serious analysis of their financials would be required to make a guess of that, assuming their public owner breaks them out sufficiently.

Ah, and that company does the Coinstar coin cashing kiosks, so that might improve their servicing situation.

Redbox in McDonalds and Walmarts are probably the bigger reason for Blockbuster's demise. Its amazing how busy those kiosks are.

Its interesting that in some areas they locate at gas stations, some at big box stores, some at fast food, but locally they're in every food store.

You can fill your gas tank less than twice a month, avoid walmart like the plague, I haven't eaten at a McD in many years, but every couple days you have to buy fresh food at the supermarket... And there is always a short line at the redbox.

I'm a bit amazed they work.

In a Blockbuster, you can have a few dozen people looking around at once for the right movie to watch. On Friday and Saturday nights, they were often packed. But a kiosk, you have to wait for the other person to finish browsing and purchasing. Seems like they work precisely because the demand is just low enough that there is not too much contention for any one kiosk.

The folks at RedBox seem to understand that and have made it very quick to get what you want and leave. Plus, it takes very little time to go over the available movies.