A British movie-vending company has agreed a deal with Tesco that will see its rental kiosks placed in three of the retailer's Irish stores this week on a trial basis.
This could morph into a grab for the more lucrative long-tail* of home entertainment demand…
A key driver in grocery is space. Tesco currently generate approx £1,000 per sq. ft. p.a., but will not want to provide the full home entertainment repertoire, because of the negative impact on their profit per sq. ft. objectives.
This will eventually drive Tesco to adopt auto-download of all digital movies,albums and games, and deliver the revenue of an 8,000 sq. ft. specialist shop from a 20 sq. ft. space, or even a kiosk…? Then they will compete on price across whole catalogue, with everyone, everywhere.
* The Long-tail 98% Rule: In a digital world of almost zero packaging cost and instant access to almost all content, consumers look at almost everything. This results in 98% of the 10,000 albums available on digital jukeboxes selling at least one track per quarter, profitably.
(The Long Tail, by Chris Anderson)
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