DVD and Blu-Ray Rental Market Plummets 21.3% in Q4

The kiosk market shows signs of strength with companies like Redbox enjoying a 28% in disc rentals

Pity the poor DVD. 

Digital streaming and video-on-demand continue to take a big chunk out of physical discs' share of the rental market, according to a report by Rentrak. 

The tracking company says that rentals of DVDs and Blu-rays racked up $5.6 billion in revenue in 2011, representing a drop of 3.4 percent from the previous year. 

The last quarter of 2011 was particularly doleful. The market for DVD and Blu-ray rentals plummeted 21.3 percent. (Hollywood better hope that means people were buying discs to fill Christmas stockings instead). 

Also read: Disney CEO Bob Iger: We May Make Redbox Wait 28 Days to Buy Our Movies

One area of growth is the kiosk market. Companies such as Redbox flexed their muscles during the final quarter of 2011. Disc rentals through kiosks grew by 28 percent, according to Rentrak. 

Studios may not be thrilled with that news. By renting discs for a little more than $1, Redbox offers consumers a cheap and convenient option, but one that comes without the generous profit margins that studios saw from old-school shops such as Blockbuster.

In a sign of the tension between studios and Redbox, Warner Bros. tried to extend delays on when the company can rent its new releases from 30 days to 56. 

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Redbox says  it will now buy Warner Bros. discs from third-party distributors, thanks to the First Sale doctrine which allows companies to re-sell pre-recorded discs. It will be more expensive, however, for Redbox to buy them this way than it would be to buy them directly from studios.

In addition to providing year-end 2011 rental figures, Rentrak also released the Top 10 most-rented DVD and Blu-ray disc titles for 2011. However, the rankings only take into account brick-and-mortar stores and do not measure rentals from kiosk companies or DVD-by-mail companies like Netflix. 

The rankings also say nothing about how much revenue each title generated. 

Action comedy "Red" was the surprising winner, beating blockbuster titles such as "Inception" and "Pirates of the Caribbean: On Stranger Tides" to be both the top rented DVD and Blu-ray of 2011, Rentrak said. 

Of course, "Red" centers on a group of geriatric hit-men, putting its stars in roughly the same demographic that still frequents brick-and-mortar video rental stores.