After recently hearing more of the studios’ argument against Redbox, we now have the opportunity to get more of Redbox’s side of the story. In an October 2nd editorial in industry journal The Wrap, Redbox CEO Mitch Lowe defended his company’s business model, saying that it helps, rather than hinders DVD sales. The salient point in Lowe’s essay was this: “The truth is that services like Redbox help to grow overall interest in and purchase of DVD entertainment.”
Lowe justified his claim by stating:
“Market research shows that Redbox’s impact on sell-through is negligible, while its impact on purchase is significant. The relationship between rentals and DVD sell-through remains complementary, not cannibalistic. A recent survey of active Redbox customers confirms that rentals often lead to DVD purchases in today’s ‘try before you buy’ culture. . . According to customer research, a majority of Redbox renters report their typical DVD purchase is the result of having previously rented and enjoyed the title. And Redbox customers are converting to purchase at a rate nearly 10 percent higher than Netflix and Blockbuster customers.”
Lowe went on to say that the convenience and low price of Redbox kiosks are ” bringing lapsed renters back to the DVD market, while encouraging active renters to rent even more.” And on the topic of diminishing DVD sales, the studios should be throwing more olive branches and less blame at Redbox, according to Lowe:
“When it comes to the decline of DVD sales, commentators and observers can point their fingers toward different targets. Some blame decisions, others blame the economy, the changing media landscape, or new and innovative distribution channels like rental service companies. As research proves, Redbox (and other DVD rental kiosks)should clearly not be one of those targets. . . To the contrary, more Redbox locations leads to added convenience for consumers and serves as an engine of increased demand for DVDs for our studio partners.”
Time for your thoughts, Insiders. Is Lowe spewing pandering propaganda or good old-fashioned reason? Now that you’ve heard more from both of the interested parties, where do you stand in this fight?
[via The Wrap]