|| The Perspective
Tuesday, 17 August 2010
Airlines have peaked, redbox has legs, healthcare should see growth and the United States remains No. 1. No doubt, kiosks have become ubiquitous, and prospects look strong, but many question where the industry is going.
Could ‘airlines’ — short for traveler self-check-in at airports, the process that has virtually replaced ticket counters — have reached cruising altitude and be on the way to a descent? Does redbox have room for growth? And where will we see expansion in the next few years, either by segment or by global region?
Kiosk industry research house and consultancy Summit Research Associates
seeks to answer these questions and others in its massive guidebook, "Kiosks and Interactive Technology," an 800-page report that includes statistics on the interactive kiosk installed base, background on 700 companies and a plethora of charts and tables, along with an examination of leading trends and significant projects.
The report grew from an online survey and follow-up research by Rockville, Md.-based Summit, led by Francie Mendelsohn, its president and a veteran kiosk consultant.
The report’s conclusions, and Mendelsohn’s, may surprise some.
For starters, self-check in at airlines has met its technological match, and it’s called the smart phone. Kiosks will remain a strong force in the sector, but many consumers eventually will switch to getting to their plane with the help of their phone.
“Airport check-in (via kiosk) is a very mature market sector. You will see incremental increases and updates of products. Smart phones will change the long-term dynamics,” Mendelsohn said.
Here’s how: Travelers will download a barcode to their smart phone when they conduct pre- check-in thru the Web before going to the airport. With the barcode loaded, the traveler will go to the airport and head straight to the security stop, bypassing the airline’s check-in kiosk to pick up a paper boarding pass. A device at the security stop will read the barcode displayed on the smart phone, and the traveler is good to go.
Mendelsohn says several major carriers, including American, Delta and United, have begun offering this smart phone application at select airports.
“In time, you will see less use of kiosks at the check-in,” said Mendelsohn, who notes this approach is more common in Asia, the global leader in smart phone applications. “Kiosks won’t go away. They are deployed at check-in all over the country. If you want to go anywhere anytime soon you will use them."
A kiosk firm that should continue to grow, she says, is redbox, the DVD-rental subsidiary of Coinstar.
“(Brick-and-mortar stores) are falling like dominos. Soon it’s going to be Netflix and redbox, if it’s not already. They serve two needs, redbox for new releases and Netflix for older movies,” Mendelsohn said.
Redbox offers extraordinary convenience, allowing consumers to make a 24-hour reservation and to drop off a DVD anywhere, all for a very competitive price, says Mendelsohn.
“Redbox is pretty formidable. I see people waiting in line to use it. That is an indicator of success,” she said.
A segment that offers promise for greater kiosk use is healthcare, specifically at providers such as doctors and dentists.
“It would be great to see patients using a kiosk to check in at their doctor’s office. (Managed care provider) Kaiser Permanente has begun to roll this out in some offices. The patient swipes a card distributed by Kaiser, and (the kiosk) brings up her information. It signs in for you,” Mendelsohn said.
Shifting to the electronic storing of patient information would reduce paperwork and eliminate many human input errors, says Mendelsohn. These factors, along with offering greater convenience to their patients, should convince healthcare providers to invest in kiosk check-in systems, she says.
Finally, Mendelsohn believes there is no question of the top international market for the industry.
“The U.S. is still the leader in the kiosk field," she said. "We can be behind others in taking to something, but once we adopt a technology we go after it whole hog.”
That’s what happened with parking and DVD rental, applications that were initiated in Europe but once implemented in the U.S. grew so large that they changed their industries. And keep in mind the U.S. is physically larger, so it has the space to offer uses like drive-thru restaurants where consumers can order via kiosk, says Mendelsohn.
So maybe airlines have peaked, redbox is still growing, healthcare shows promise, and the U.S. is tops. Then again, there may be an application out there no one is thinking of that remakes the whole industry. Entrepreneurs succeed by swimming against the tide.
Burney Simpson is contributing editor to KioskMarketplace.com This post originally appeared as an article on KioskMarketplace.com Aug. 9, 2010.
Monday, 05 October 2009
Though a recent state-of-the-industry study from Summit Research Associates reports languishing global kiosk installations, Summit founder Francie Mendelsohn believes the industry will see growth again starting in 2010. So why not use this fresh beginning to go one step further and embrace the growing demand for digital delivery and mobile self-service?
We all know kiosk adoption isn't a matter of getting apprehensive users to understand the technology anymore. They've proven that they comprehend and even prefer self-service. But for consumers to remain confident that anything a clerk can do they can do better, solutions providers and application developers must expand their ideas about what self-service means and give users more — and different — options.
In her analysis of the DVD kiosk segment, Mendelsohn warns that the application will be eclipsed by the digital delivery of films in upcoming years. In other words, while DVD kiosk brands are either suing Hollywood studios or wheeling and dealing with them, shoppers are wondering when digital distribution will be a reality. Not a day goes by that I don't see a Tweet from a redbox customer asking when she'll be able to download the movies she wants to watch instead of traveling to a kiosk, waiting in line and hoping the disc is in stock.
According to Video Business, Sony Home Entertainment and Universal Studios both already offer video on-demand service in the home through cable pay-per-view provider iN Demand, and both studios are working with others in Hollywood to provide a Web-based VOD service soon. To get a piece of the pie, self-service providers must find a viable way to deliver films digitally to consumers as well.
MOD Systems has gotten a foot in the door on the digital download front with an upcoming pilot deployment of kiosks that allow users to download movies to an SD card, which they then plug into their televisions. While the MOD pilot is a step in the right direction for the industry, I would guess that a small percentage of consumers own TVs with SD card slots and built-in media players, potentially making the solution impractical on a large scale.
These kinds of ideas are a start, but self-service providers have to figure out a way to offer digital distribution of films in a manner that makes sense for users and comes naturally to the consumer experience. And that may mean we need to let the definition of self-service evolve beyond the kiosk to accommodate the experience the technologically discerning consumer has come to expect.
Also in the Summit report, Mendelsohn says airline self-service will continue to move toward offering mobile capabilities — some carriers in Canada and Asia already offer the technology, and one U.S. carrier is testing it.
According to recent data from SITA, a provider of communications and I.T. solutions for the air-transport industry, 44 percent of passengers indicated positive feelings toward mobile self-check-in, and 66 percent of self-service check-in users said they would prefer an electronic boarding pass over a paper version. So while airlines are trying to figure out what else they can charge a fee for, travelers are wondering when they'll finally be able to head straight for security with their boarding passes on their smart phones.
But the beauty is that, although savvy movie lovers and travelers may be clamoring for the next big thing in self-service technology, the movement won't cannibalize current kiosk offerings. Kiosk developers have hit on something special, and self-service as we know it now isn't going anywhere.
For instance, SITA's survey also found that at Atlanta's Hartsfield-Jackson Airport — which the company says is the world's busiest — a record 83.8 percent of passengers used self-service check-in. And, compared to the nearly half of travelers surveyed who said they felt positive about mobile check-in, an impressive two-thirds said the same about kiosk check-in.
Perhaps Dominique El Bez, SITA's director of portfolio marketing, said it best when I asked how kiosks are to stay relevant as technology and consumer demand change around them.
"It is not about doing the same thing from a different channel," he said. "It is about doing things differently. Kiosk providers have to adapt rapidly and must consider the kiosk as a component of a holistic self-service transformation."
Wednesday, 07 January 2009
As deployers and vendors look to maximize the value of self-service in the coming year, it helps to take a look back at what did (and didn't) work in 2008. As editor of SelfService.org, I've compiled some of the stories that rocked the industry last year. Here is Part II of that list.
February was a black month for Citibank as two Brooklyn men allegedly made hundreds of fraudulent withdrawals from New York City ATMs. They reportedly pocketed at least $750,000 in cash. The significance of the thefts? Experts say this ATM crime spree is the first to be publicly linked to the breach of a major U.S. bank's systems.
#4: NCR debuts SelfServ kiosk, ATM lines.
In January, NCR announced the release of the SelfServ ATM, its first new line of ATM in a decade. The SelfServ ATM features, among other things, the ability to accept bulk check deposits. It also comes equipped with so-called self-healing technology – technology that enables the ATM to recover from some malfunctions via a remotely-managed reboot.
The SelfServ 60 kiosk was unveiled in October at KioskCom Self Service Expo. It integrates Intel vPro technology, including the next-generation Intel Core 2 Duo processor and Mobile Intel GM45 Express chipset, enabling it to run more advanced and engaging applications than its predecessor, the EasyPoint 42 kiosk.
#3: EyeSite kiosks help health care industry 'see' the light.
It was early in 2008 when EyeSite kiosks first broke into the national scene. Developed by startup SoloHealth, the EyeSite kiosk provides the user with a self-service eye exam. Though not a substitute for a professional eye exam, the kiosks do give the user a general idea of the quality of his vision and spotlights the dangers of conditions such as cataracts, glaucoma and macular degeneration. The EyeSite kiosk was developed via a partnership with Netkey and KIOSK Information Systems.
#2: Redbox and Universal Studios go head-to-head.
In August, representatives of Universal Studios showed up unexpectedly at the headquarters of redbox with an ultimatum: Sign a revenue sharing agreement limiting the types of DVDs that could be stocked in redbox kiosks, as well as the amount charged for them, or Universal would cut off sales of its DVDs by commercial distributors. Redbox refused to sign the agreement and in November, filed a lawsuit against Universal, alleging that the distribution company was improperly interfering with a business relationship.
The lawsuit highlights the dramatic effect DVD kiosks are having in entertainment industry. The lack of overhead means DVD kiosks are able to offer DVD rentals for $1 a day – a dramatically cheaper price than that charged by brick-and-mortar stores.
#1: Recession strikes the world economy.
There's no denying that the economic downturn that struck in the last financial quarter of 2008 will have a significant impact on the self-service industry. The jury is still out: Will companies turn to self-service in an effort to cut labor costs, or will they shy away, fearing the initial costs of new deployments?
"We're on the eve of, probably, the greatest financial crisis of our time. In retrospect, I don't think we've ever seen anything like this since World War II," said V. Miller Newton, president of the Self-Service & Kiosk Association, while at KioskCom Self Service Expo in October. "Companies are definitely hunkering down. They're gonna cut costs … they're gonna be budget conscious … but I believe self-service is a critical component and a must-have in this economic downturn."
Tuesday, 25 November 2008
You may have read what Universal Studios decided to do on its summer vacation: take on redbox, the successful DVD rental kiosk operator. On a late August day, reps from Universal decided to show up on redbox's doorstep and demand that company execs sign an agreement – that was a lose/lose situation for redbox – by the next day.
Why exactly Universal decided to confront redbox in this way is not clear, but what is clear is redbox would no longer be competitive with Blockbuster and other video rental outlets on renting Universal's videos if it has to wait 45 days after the release date to rent those not-so-new releases to the public.
I'm sure Universal's distributors – VPD and Ingram – were not too thrilled with Universal's actions since redbox is a big customer, but what can they do? Universal is certainly the Goliath in this drama.
But redbox has put a rock in its sling and aimed it right back at Universal by filing a lawsuit claiming infringements on redbox's rights to DVDs it's purchased, violating antitrust laws and interfering with its relationship with its suppliers.
Did Universal want a bigger cut of the profits? According to the lawsuit, Universal wants 40 percent of redbox's rental revenues on Universal's videos.
The lawsuit also reveals some interesting statistics:
- redbox had 125 kiosks in 2004, had nearly 6500 by the end of 2007 and expects to exceed 12,000 kiosks by the end of 2008.
- To date, consumers have rented more than 200 million DVDs from redbox.
- Consumers average approximately 50 DVD rentals per day per kiosk.
- Consumer demand has supported redbox' s expansion such that redbox has installed a new kiosk, on average, every 90 minutes somewhere in the United States this year to date. As part of this expansion, redbox has hired over 600 new employees this year.
While Universal is the first studio to try this tactic, I'm sure the other studios are watching with interest. Should Universal win, they'll probably follow suit and that could seriously undermine redbox, DVDPlay and other DVD kiosk operators' ability to compete with the likes of Blockbuster, Netflix and Apple iTunes.
Personally, I'm a big fan of DVD rental kiosks. Ever since I rented my first videos from redbox in November 2006, I've been a loyal customer. The price/value relationship is too good to beat; I'm also a fan of self-service kiosks in general and I'm still mad about those late fees video stores charged me over the years. (Full disclosure: redbox chief executive Gregg Kaplan joined the Association's Advisory Board in April 2007.)
DVDPlay says that Universal asked them to sign a similar agreement and they've refused, so a least there's some solidarity among some of the DVD kiosk players, though Polar Frog Digital's chief executive Todd Rosenbaum takes a different point of view, which I don't really buy. He complains that redbox doesn't pay licensing fees and then admits his firm (which makes DVD burn-on-demand kiosks) doesn't either. He also claims redbox buys "closeouts of products," which may be true for some of their DVDs, but the majority of their products seem to be new releases.
Let's hope David (redbox) prevails against this Goliath (Universal) for the sake of our industry and for the sake of the consumer.
Tuesday, 19 February 2008
Anyone who thinks self-service is a boring industry obviously hasn’t been reading the news lately.
Seriously. I’ve seen some real zingers cross my e-mail in the past few weeks. Check out this Associated Press story, for example. No, there’s no need to hit that refresh button, you read it right. A drug store in Los Angeles has deployed self-service kiosks to dispense medical marijuana. Hash for cash, so to speak. Not only did this controversial deployment raise the eyebrows of some of us here in the office, but it also caught the attention of the good folks at the U.N.’s International Narcotics Control Board in Vienna, who quickly ruled that the machines are illegal and should be shut down. Given that the U.N. has no binding legislative authority in California, it’s doubtful anyone at the drug store is pulling the plug just yet.
Then there’s this story coming out of Union City, Ind. Anyone who’s been in this industry for more than two weeks knows all about the DVD rental kiosks now available at fast food joints. The kiosks enable users to rent copies of the latest movie releases which are viewable for a pre-specified rental period. Well apparently, they’ve stirred quite a controversy in this one little town. It seems parents are worried that the kiosks will provide minors with unsupervised access to movies containing adult material — that Little Johnnie and his preschool buddies might decide to pick up “Fatal Attraction” with their happy meals. So the townsfolk took their case to City Hall and when the city threatened the deployer with a public nuisance citation, the deployer decided to remove all R-rated movie titles from the kiosk’s stock.
These news stories were the material of some great philosophical chatter around the coffee machine here, and not surprisingly, were among the most widely read stories on SelfService.org. I don’t mention them here to declare who was right or who was wrong in each instance, but to make a valid business point. These two seemingly unrelated stories both dredge up an issue that will become increasingly important as self-service continues to grow.
That issue can be summed up in one word: culpability.
* * *
Sure, kiosk deployers know exactly how their products are to be used as well as who is supposed to use them (and who isn’t). But what if the kiosk user decides to take matters into their own hands? What if a disgruntled teenager hits your drug store kiosk and overdoses on Tylenol? Suppose a man who isn’t suffering from any medical condition manages to get a packet from the marijuana kiosk and is arrested later that night in another state? Add to that the people who inadvertently get into trouble, such as the five-year-old who slips a few quarters into a machine, buys a laser pen and burns out his retina.
They’re all disturbing cases, but what do they mean for the deployers? Are they liable for civil damages just because the consumer abused (or misunderstood) the use of the product?
I took the question to Gail Ritzert, a partner at Havkins Rosenfeld Ritzert & Varriale LLP, a law firm in New York.
Ritzert, an expert in product liability law, likened products purchased through a self-service kiosk to products bought online or via a more conventional vending machine. In these cases, she said the responsibility is on the deployer or site administrator to take “reasonable” precautions to make sure that the consumer who is purchasing the product is who they should be … and knows how to use it.
“This kiosk, while it’s not a person, is standing in the place of a seller or a store that is distributing the product,” she said. “What reasonable steps were in place to make sure that you did what could be done to eliminate the person who should not have access to what the product is?”
Unfortunately, she says the legal definition of “reasonable” can vary on a case-by-case basis.
“What I would say to the manufacturers and those who are distributing the product is: Make sure that you check the product because you’re not going to have control over the person who uses the machine,” she said. “That being said, depending upon the software that is used, there are some things that could probably be built in to make sure that there are certain triggers on different things.”
Making sure all of the products in the kiosk have proper warning labels can be a good start, she says. She adds that — for some age-specific products — it might be a good idea to require the consumer to verify that they are above a certain age range. This can be done via a push button or touchscreen interface.
While that may not stop underage consumers from obtaining something they shouldn’t, it will likely demonstrate — to a jury if necessary — that the deployer was taking some steps to protect them.
“We can’t eliminate all misuse,” she said. “But again, the question it comes down to is: Were reasonable steps taken to make sure that directions or age appropriateness were followed?”
* * *
In the meantime, keep your eyes on the developments in Los Angeles and in Union City. The outcomes in both instances will no doubt have a significant impact on the types of products that will or won’t be offered at a kiosk near you in the future. In the meantime, feel free to check SelfService.org for all the latest on these two cases. We’ll be here to “hash” out the details.
Tuesday, 06 February 2007
Since March, I’ve been hitting the road, taking one week a month to visit companies in the self-service and kiosk industry. During those trips, I’ve had the opportunity to visit a few companies engaged in the DVD-rental kiosk business. As someone who is a big fan of movies, but not a big fan of going to the video store, I get very excited about DVD kiosks. I’ve just been waiting for a DVD kiosk to be installed near me.
The wait is now over. My local Albertsons in Texas now has a redbox unit. I was about to take a road trip with my wife and kids to visit her family in St. Louis, so I thought I’d stock up on some movies for the car. Since you can return the videos to any redbox nationwide and there’s a redbox in the McDonald’s near my in-laws’ house, returning them was a snap. Cost for two-day rental of three movies after $1 first-timer discount: $5. Cost of my sanity on a 12-hour drive with three kids: Priceless.
Redbox now has deployed more than 1,700 units throughout the United States. In addition to locations in McDonald’s and Albertsons, they’re also testing them at Walgreens and Wal-Mart. DVD kiosks are popping up everywhere, from KOA Kampgrounds to the Tokyo underground. They’re perfect for apartment complexes, university campuses and convenience stores.
According to Video Business Online, redbox has doubled in size over the past 12 months, and the company hopes to be in more than 20,000 locations worldwide within five years. You know how many McDonald’s and Wal-Marts there are out there; this thing could be huge. DVDPlay, one of redbox’s competitors, rented its five millionth movie in June.
There are a lot of companies getting into the mix. In addition to redbox and DVDPlay, I’m aware of at least 23 others vying for a piece of the $25 billion dollar video market. The kiosks range in size from two feet square with 75 DVDs to about the size of a soft drink vending machine holding up to 1,000 DVDs.
To entice people to try the kiosks, several vendors are offering discounts and free first-time rentals. Vendors also are offering online reservations to ensure the title you are seeking will be there when you visit the kiosk.
You might be wondering how will digital downloads impact the market. First, let’s look at the downloading-at-home market. While the iPod and its online store, iTunes, have revolutionized the music industry, speed and quality are two deterrents to full-length movie downloads. Plus, most people don’t want to watch a movie on a 2.5-inch screen.
Microsoft recently launched a movie download service for the Xbox 360, though users have reported many problems with the service. Downloading a movie can take an hour and a half or more depending on your Internet connection. Most people are too impatient to wait that long.
Once the legal hurdles are overcome, you could see on-demand DVD burning kiosks on the rise, increasing their potential catalog of movies 10 fold.
For now, the holy grail could be a combination of instant gratification from a DVD vending kiosk and the convenience of returning movies by mail a la Netflix. It will be interesting to see how this all plays out.
Tuesday, 30 January 2007
Over the past 18 months the vending kiosk has become a hit. Unlike its information-terminal cousins, these kiosks combine a user interface with robotics to deliver physical products. Let’s take a look at two such systems.
First on my list is the Zoom Shop from San Francisco-based Zoom Systems. Last October the company raised an additional $35 million to fund its push to automated retail leadership. If you have yet to see a Zoom Shop, you’re in for a treat. These things look like a snack vending machine on steroids. But instead of Doritos and gum, these kiosks move high-end products via a touchscreen interface and the swipe of a credit card, with a portion of the revenues going to the location owner.
As part of my research for this column I checked out a Zoom Shop located in a nearby Macy’s department store. Macy’s, which you may not think of as a tech-forward retail environment, has received a boost from the Zoom Shop. The ideally situated vending kiosk, tall in stature and wide in product, offered various gizmos, including iPods and related accessories. What a great way for the retailer to be associated with the hottest electronics without having to invest in a specialized gadget department.
Now, purchasing something like a $300 iPod from a vending machine might take a little getting used to, but the success of Zoom Shop tells us that consumers just might be ready for high-end, sophisticated vending. It is estimated that as many as 300 Zoom Shops are installed. It’s like retail-in-a-box technology and a new take on the old and proven vending machine business model — though I doubt you’ll see objects larger than what can fit in your hand anytime soon.
Second on my list is redbox, a renter of DVD’s through its network of about 1,800 automated vending kiosks. The company started testing the terminals in Denver back in 2004. I was fortunate to have the pursuant wide-scale deployment to McDonald’s restaurants happen in my backyard here in Minneapolis. I’ve since seen redbox show up in locations such as grocery stores.
The touchscreen user interface provides a selection of current or popular movie titles. With the swipe of a credit card, the machine dispenses the DVD of your choosing, which can be returned to any redbox location after viewing. Each kiosk holds more than 500 DVDs. The company also released an online rental program that works with the kiosks.
redbox’s business model, although simple, has turned the movie rental industry on its head. Most of us were used to renting at Blockbuster, Hollywood Video or even the neighborhood mom-and-pop video rental store for about $4.25, and others had dabbled with subscriptions to Netflix for $19.95 a month. redbox’s pricing changed everything. Now, at the redbox terminal, you can rent movies for $1 per night.
If you ask really nicely, I can hook you up with a copy of a study I sponsored on redbox kiosks. Sixty-six percent of users stated price as their primary reason for choosing redbox, with convenience coming in at 36 percent. An impulse to rent or selection had almost no noticeable impact, which tells me that users found value combined with accessibility as a major purchasing factor.
Though redbox cannibalizes sales from traditional movie rental stores, it stands on its own in terms of price over income. From Dec. 2005 to Nov. 2006 more than 15 million DVDs were rented from more than 800 redbox-equipped McDonald’s stores. Further, redbox-equipped McDonald’s locations sold 5 percent more food and drink than non-equipped locations.
Vending kiosks are taking off. Whether the product is $300 or $1 per night, these kiosks have proven their ability to succeed. Expect to see vending kiosks used in new and increasingly creative ways in the near future.