If it wasn’t already clear that 2006 was a record year for the DVD kiosk industry, DVDPlay has added their own exclamation point to the success of the industry by releasing an update on their own DVD kiosk program.

During 2006, DVDPlay continued to demonstrate phenomenal growth for their brand and now has over 1,000 DVDPlay branded locations, on top of another 1,000 non-branded locations that consumers can rent from. The company also announced that in 2007, they are planning to continue their aggressive rollout of kiosks by adding another 2,000 locations to their program.

Considering that just a year ago, DVDPlay was announcing that they had rented their 4 millionth DVD over the life of their business, it pretty amazing to see them add another 2 million DVD rentals, just over 2006 alone.

With demand from consumers and retailers clearly continuing to increase, DVDPlay is starting to gain serious traction in the market for DVD rentals. In addition to hitting these growth milestones, the company also announced that their rollout into Arizona is almost complete and they now have kiosks located in 90% of all Arizona Safeway stores.

The official word from Safeway is that it’s still too early to gauge the success of these rollouts, but from their comments, it’s clear that even if the machines were running at breakeven, there is still a huge benefit for them to give up 5.5 square feet of their store, in order to be able to offer DVD rentals to their customers.

“Safeway spokeswoman Nikki Daly said its too early to determine how popular the kiosks are with customers. “This is just another way for us to offer convenience to our customers,” she said. Daly said the company phased out video departments in many of its stores because they were too much of a drain on staff and consumed too much space.”

With more and more retailers taking a closer look at offering DVD rentals to their customers, DVDPlay sits in an attractive position to capitalize on this trend. If they do end up tripling the number of kiosk locations by the end of this year, it won’t take long before these developments start having a real economic impact on traditional video stores. While the selection on a kiosk can’t replicate what’s available at a local video store today, the convenience of kiosk rentals and the ability for the industry to deploy machines quickly and cost effectively, could put enormous pressure on an industry that is clearly very much in flux.

So far, grocery stores have been the most likely locations to adopt the DVD kiosk, but the more popular this technology becomes, the greater the potential that this market has to grow . With coffee houses, fast food restaurants, gas stations and quick serve convenience stores still without a DVD rental option, the growth potential of this market is really quite extraordinary. With many retailers only putting their toe in the water during 2006, I expect that we will see significant demand for DVD kiosks increase in 2007.

2006 may have turned out to be a record year for the DVD kiosk industry, but with with all three of the major kiosk players planning aggresive growth in 2007, I have even higher expectations for what we’ll see by the end of this year.