Last November, we expressed skepticism about the kiosk plan. "The major advantage [Blockbuster] had over Netflix was the ability to offer free in-store rentals if people returned mailed videos to the store," we wrote. An in-store kiosk cuts the convenience level in half -- now that you're not getting anything mailed to you, you're forced to make a trip to the store, and there is no longer any reason for Blockbuster to offer free rentals.

Much of Blockbuster's good news was at the store level where mechandising revenue rose 19.7% over last year. But as the Motley Fool points out, in-store kiosks might hurt that revenue stream. "I thought the purpose of winning foot traffic at the store level was to grow incremental impulse-item sales," writes Rick Aristotle Munarriz. "Folks walking in to use an automated kiosk are unlikely to bother with conventional checkout lines."

What About Redbox?

While it's true that Redbox DVD rental kiosks already have 6800 locations in the US -- more than Blockbuster -- and that the company is moving toward an IPO, Blockbuster's kiosks aren't the same. Redbox works because the kiosks are placed in locations that already have a lot of retail foot traffic -- such as Wal-Mart, Walgreens, and grocery stores. Redbox inspires impulsive movie rentals and is convenient for people already out doing other errands.

Blockbuster kiosks, on the other hand, would be in places you only visit if you're planning to rent a movie already. The convenience of no late fees is also diminished when you have to leave the house and download your movie to a portable device -- which may mean less than perfect video quality when you hook your device up to a television.

The Future is in Downloads

Last fall Keyes told reporters that he expects the DVD business to be a significant part of Blockbuster's business for at least 5 years, and that the kiosks are meant as a way to transition users toward a future of digital downloads. Netflix agrees that in 5 years the DVD business will be on the decline, but Netflix is skipping the "transitional" period and moving straight to downloading movies directly to the TV.

Blockbuster is also working on a set-top box, which will put its acquisition of movie download service Movielink to use. Unfortunately for Blockbuster, they'll be a late entry to a market that is already crowded with mammoth competitors, including Amazon, Apple, Netflix, and Microsoft.

Despite some good revenue news, Blockbuster still seems like a company that's making all the wrong moves as it struggles to transition to the digital world.

Perhaps the Onion says it best though, in the following news report.

The latest company thought to be readying its own Internet TV set-top box plans is Blockbuster, according to Hollywood Reporter. The new “set-top device for streaming films directly to TV sets” could be announced as early as this month, and would utilize the company’s recent acquisition of online movie service Movielink, giving users access to over 3,000 film titles from major Hollywood studios Paramount, Sony, Universal, Warner Bros. and MGM.

BBC iPlayer lands on Wii - who said Nintendo doesn’t do media center?

A version of the BBC’s iPlayer will be made available on Nintendo’s Wii, announced the UK public broadcaster’s Future Media and Technology chief Erik Huggers during a keynote speech at the MipTV-Milia conference in Cannes. The move marks the first time the iPlayer will be available on a games console, and perhaps surprisingly, not one designed specifically to be a media center. So much for the ‘trojan horse into the living room’ strategies of Sony’s PS3 and Microsoft’s XBox 360.

Babelgum commissions feature-length environmental documentary

Internet TV platform Babelgum has always pitched itself as serving the interests of independent video producers who want to find and connect with niche audiences. By tapping into the Long Tail, the company maintains it’s possible to “find an audience that rivals or exceeds the mainstream TV audience in any local market.” However, Babelgum has now crossed a line, moving away from being purely a content distributor to also commissioning original and exclusive content of its own. Last month, the company announced plans to set up a $10+ million production fund, telling Variety that Babelgum was “transforming into a digital media studio.” The first of those commissions is thought to be a feature-length environmental documentary about the threatened Athabasca Oil Sands region in Alberta, Canada.