DVD kiosk business RedRoom sold to owner of Blockbuster, Video Ezy franchises

DVD vending machine group RedRoomDVD has been sold to Franchise Entertainment Group, the operators of the Blockbuster and Video Ezy franchises, as it attempts to expand beyond the traditional bricks and mortar model to compete with new entrants.

The move comes as the DVD rental market is being slowly transformed into a hybrid of physical rentals, kiosks and digital distribution, led by companies such as Telstra and Quickflix.

In a statement, the two companies said the deal was completed on December 12. A purchase price was not disclosed.

FEG co-owner Paul Uniacke said RedRoom wit sit alongside FEG’s existing kiosks business, which is being managed by sister company Evolve Entertainment. It also recently bought 1,000 kiosks through the acquisition of American firm National Cash Registers.

Uniacke has previously said kiosks are a flawed model, but the company has been pursuing a hybrid strategy nevertheless.

“Kiosks are all about customer convenience, so for both brands [Blockbuster and Video Ezy], these new and additional touch points will add value to the overall brand offering in the market for many years to come.”

Uniacke, who owns the business alongside Edward Nedelko, says the business wants to see 3,000 Video Ezy and Blockbuster kiosks eventually rolled out.

The move comes as bricks and mortar rentals are struggling. Kiosks are emerging as a key alternative, which allow users to make cheap rentals without having to search through an entire store.

Digital distribution has also put pressure on local rental stores, but Uniacke denies the technology has reached a critical mass and argues it will be many years before the physical storage media becomes out of date.

RedRoom was founded seven years ago by Dan Joyce and Nic DiVenuto . It has a network of 100 kiosks and 250,000 members, along with a store network, which will also be acquired in the deal.

Last year, Joyce told SmartCompany that bricks and mortar rental stores would have to start cutting costs in order to survive.

“The core purpose of RedRoomDVD has been to better connect people to entertainment and with the business now in the hands of the biggest and most diverse home entertainment player in Australia, we are confident our customers will continue to be better connected to entertainment through whichever distribution channel they choose,” he said in a statement.