With streaming video services such as Netflix dominating the rental market in the US, TV and movie rental sales in stores have now fallen to just about 20% of the US market share. Due to content licensing difficulties in Canada that make it difficult to run such streaming services there, 60% of TV and movie rentals in Canada involve picking up a movie from a store.
Despite Netflix launching in Canada two years ago, they are still struggling to become mainstream, but have so far claim to have doubled its customer base over the past year. Blockbuster in Canada has already gone bankrupt and even the competing service Rogers is stepping back.
The main rental services now taking off in Canada are kiosks. While they currently account for a fraction of the market, the companies that run them such as Zip.ca are rapidly rolling them out. Best Buy wants to double its number of kiosks to 130 by the year end. Redbox Automated Retail, the dominant kiosk operator in the US with 29,000 kiosks also intends expanding into Canada.
Smaller independent stores which have been struggling with the industry changes are also benefiting as the result of the closure of national chains and struggling streaming services. According to the Convergence Consulting Group, independent stores are will earn 75% of store-based revenue in 2012 compared to just 50% last year.
