According to one analyst, a 30-day block on new release titles could cost the Redbox up to 50% of its revenue. Pali Capital analyst Richard Greenfield, who along with half of Hollywood is bearish on the company’s $1 business model, believes that if Redbox were to yield to mounting pressure and accept a delayed rental window on new releases, the impact to the company’s revenue would be much higher than the 10% Redbox claims. Says Greenfield:
“Redbox relies on the new-release business, if it did not, it would not be suing three studios . . . We suspect the impact is closer to 35% to 50%.”
According to Greenfield, “Redbox’s business model devalues home entertainment to near penny status and makes alternative distribution formats such as DVD/Blu-ray sellthrough, in-store and subscription rental, video-on-demand, and even theatrical appear overpriced.” Greenfield thinks that more retailers should impose quantity limits on Redbox similar to those recently put in place by Walmart and Target.
Greenfield also believes that consumers will soon become tired of the lack of new releases in Redbox kiosks and take their money elsewhere. According to Greenfield:
“If titles 1, 2, and 3 are not available after a few trips to a Redbox, and [consumers] are exposed to commercials on TV for VOD and on the Internet (streaming), we believe their perception of Redbox will change,”
Insiders, what do you make of Greenfield’s comments? Does he have a point, or will Redbox be able to overcome supply issues and prove him wrong? Tell us where you stand in the comments.
(via Home Media Magazine)