The movie rental business is currently undergoing considerable change and increased competition, says analyst Dennis McAlpine of Scarsdale, NY-based McAlpine Associates. Chief among them are online subscription services through which, for a monthly fee, consumer-members order online and have a set number of movies or games delivered each month. One of these subscription services, "NetFlix, has about 2.5 million subscribers," McAlpine says, "which is 2.5 million high-volume renters who are no longer going to video stores." Blockbuster, Amazon and others are entering this field, which McAlpine believes will reduce video store traffic even more.

Video on demand, increasing offered to cable-TV subscribers "represents a relatively small proportion of home movie consumers," he says, "but we will see a lot more of this in the future. Add to this cheap sales of new and used DVDs, particularly in children's titles," he adds. Of video vending, McAlpine says, "Initial video vending machines simply did not work well. While the concept may be viable, there have been problems with the technology."

LaBeau tells GSR, "there have been no problems with the (MoviebankUSA) machines. They've performed very well. The technology, which originated in Europe, is very technologically advanced, and it's simple, as simple as an ATM." He says MoviebankUSA personnel visits Duane Reade stores that have the machines about three times a week. "The machines are monitored by a computerized system that tracks the movement of titles," he adds, "so Moviebank's service department adjusts reloads of the machines according to that tracking."

MoviebankUSA also adjusts each machine's inventory according to neighborhood preferences, says Delouis. "In Greenwich Village, for example, we include more foreign film titles. But new releases," he says, are the real name of the game." Like video stores, MoviebankUSA gets new movie releases three months after movies open at theaters, while vide-on-demand must wait six months for new releases. "This is a definite advantage," he says.

Delouis tells GSR that MoviebankUSA anticipates announcing a similar partnership with a major supermarket chain soon, and he says his company also plans to target office buildings and fast food restaurants. Additional plans call for installing freestanding kiosks in suburban and urban locations, some at existing retail venues, such as convenience stores, and others at locations leased by MoviebankUSA in towns and at malls and shopping centers, where he says about 500 sf would be required for installation.

Duane Reade is the largest drug store chain in the New York metro area. Of its approximately 224 stores, 104 are in Manhattan. According to Hoover's, because of Manhattan's dense population, Duane Reade "has more sales per sf than any other drug store chain."