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thumbsdownWe recently posted a story discussing Redbox’s limited sellthrough kiosk test currently taking place in Southern California. The black boxes carry the Vidigo brand name and hold about 200 discs, priced up to $20.95 for DVDs and from $24.95 for Blu-rays.

While Redbox has not yet determined an end date for the kiosk test and is reserving judgement on its success, several analysts from respected firms have spoken out against the black DVD vending kiosks in recent days.

According to Home Media Magazine, analyst Michael Nathanson of Sanford Bernstein in New York said the tests “represent a goodwill gesture to the studios and not much else”. Additionally, Nathanson said the fact that the black boxes are not located near large retailers such as Wal-Mart and Target “underscores their limited potential”. He summed up his analysis with the following:

“Who would buy a DVD from Redbox when it is known for the $1 rental? No one.”

Another analyst, Edward Woo with Wedbush Morgan Securities in Los Angeles, said that if Redbox doesn’t compete with or undercut retailers such as Walmart on price, the concept will fail.

“Redbox is successful because of the $1 per day rental, and unless they sell movies at a low enough value, they will remain just a DVD rental service,”

I think many would agree with Woo that twenty bucks for a DVD or $25 for a Blu-ray seems a little steep for most consumers, especially since the black boxes’ products appear to be positioned as impulse buys. Are these analysts right on the money, Insiders, or is Redbox going to be able to work some black magic with its sellthrough kiosks?

[via Home Media Magazine]

6 Responses to “Analysts Criticize Redbox Sellthrough Tests”

  1. Visitor [Join Now]
    The [visitor]

    Those Kiosks would do extremely well in airport terminals. Most laptops can play DVDs and there’s a lot of portable DVD players for under $75.

    People waiting around, delayed flights and they could watch them on the plane.

    • Visitor [Join Now]
      FalconFour [visitor]

      Hate to say it, but… that’s exactly what Redbox is perfect for. Rent here, return there.

      Also, haven’t you already shelled out enough of your life savings for a plane ticket? How many people would be willing to over-pay for a kiosk DVD anyway? Then there’s my personal opinion… if you’re at an airport, why aren’t you watching the planes and getting all giddy about the flight ahead? :D

    • Visitor [Join Now]
      The Hoff [visitor]

      redbox is already installed in a handful of mid-sized market airports (nashville, st. louis, Indy, milwaukee, colorado springs) and has contracts with many major ones (logan, laguardia, jfk, raleigh-durham, atlanta) which are in process of being installed. the average airport location sees returns from all over the country i.e.people who are using the airport locations already know about redbox and recognize the convenience while they travel.

      • Visitor [Join Now]
        The [visitor]

        Good points, FalconFour and Hoff. If I knew that there would be a Redbox at the other end of my flight, I would rather rent. If I had a rental car planned there would be no problem.

  2. Member [Join Now]
    ChadCronin [chadcronin]

    I would say if they are pretty competitive with Walmart then I would definitely buy Blu-rays from them if they were in convenient locations.

  3. Member [Join Now]

    “Who would buy a DVD from Redbox when it is known for the $1 rental? No one.”

    That’s a horrible argument. Blockbuster never sells movies?

    Does Natherson really think Walmart or Target would allow Redbox to sell DVDs outside of their stores? Come on man… think. The kiosks would have more success at supermarkets or in locations where people are at but not necessarily threatening retailers. You won’t see one near a Best Buy either.