Sunday, 27 July 2008

DVD Rental - from Tesco Vending Machine

This week a large shiny new vending machine appeared at the exit of my local Tesco. Surprisingly, given its size and eye-catching location, it seemed to go largely unnoticed for the first few days.

I did pick up a leaflet from the dispenser (empty in this photo, but by the arrow numbered 1) which promised a free rental for first timers, although of course you still had to swipe your credit card. I'm wary of swiping my credit card at machines I'm unfamiliar with, so I resisted - despite the enticing selection of all the latest DVDs - which I guessed were probably also in brand new, pristine condition.

Yesterday evening I picked up the leaflet again and looked up the website for .Here I discovered they are not, as I assumed another Tesco venture, but a US company launching their brand in the UK for the first time. They have very few locations at the moment so perhaps this is a soft trial rather than a huge rollout.

The website is impressive because it gives a real-time stock display for each location. When I noticed that the Oscar winning There Will be Blood was sitting in the machine just up the road and could be mine for the evening for free I decided to try the service out.

Yesterday was a very warm evening but there was a bit of crowd by the previously ignored DVD vending machine. The couple in front of me didn't rent but only it seemed because they couldn't agree on a movie. I followed the instructions, entered the voucher code TRY4FREE, swiped my Amex card (Amex I've found to be very reliable when it comes to sorting out rogue transactions) and the machine slid out the DVD. It even promised to email me a receipt if I typed in my email address (the website promises not to sell your email). When I left the store there was a crowd of people looking to rent DVDs.

Later in the evening I had another look at the live stock inventory and it was much reduced, so clearly the service is taking off. £1.50 is very little for a new release (even Sky box office is £3.99 - although of course it is delivered on demand). The only downside is the open ended agreement on your credit card, adding £1.50 each day the DVD remains out - and a £25 charge if it isn't returned. There is a free telephone number in case there are any problems.

The stock is updated with new release DVDs every Monday, and for $12.99 (which I assume is a US translation typo on the website for £12.99) you can rent an unlimited number of DVDs - no waiting for the post, or long waits for popular selections (as with most postal DVD rental outfits).

I'm surprised to have found a DVD rental vending machine an attractive proposition in the download on demand world, but I did.

As a conclusion to this consumer innovation, I'm reading a new book Predictably Irrational by economist Dan Ariely. He argues that we humans don't act as standard economic models predict we should. Instead we follow our emotions - which often give us the wrong signals. So we make mistakes, but our mistakes are predictable. 'Free', he says, is a very powerful motivator. The downside of free is usually zero. We'll pick up free stuff at a convention - key fobs, binders, t shirts - because they're free, even if we throw them away later. We queue for free admission days at museums and galleries - even though queues are longer than on paid for days. Free is a powerful driver to overcome consumer resistance.

The power of 'Free' may explain the queue at the DVD vending machine - rather than the attractiveness of renting DVDs from a vending machine placed by the exit in Tesco.

In the US DVD Vending is big business. Research shows consumers like the physical contact with the actual product much more than a download.

Incidentally There will Be Blood is an outstanding, if bewildering movie.

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