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.
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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.
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. . 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]
I think Lowe is right. I would never buy a DVD unless I’ve already either seen the movie in a theater or I’ve rented it. We rarely visit the cinema (pricey) and so we often just rent from Redbox, and then we decide if that movie is worth bringing into our home collection or not. Blockbuster is pricey compared to Redbox, and a free night is usually a spontaneous thing, so we cannot use a program like Netflix.
The declining economy has not changed our weekly outing to the fast food joint down the street, and it has not affected our choice to rent from redbox when we feel the hankering for a movie. We aren’t the normal family though…we did and do not eat out more than once a week, we did and do not rent more than once a week, and we did and do not usually rent more than 2 movies at one time.
I think Paramount will answer that for us. They will have access to all the numbers.
We’ll have to wait and see!!!
A recent survey of Redbox Customers on this site shows that Redbox Customers won’t even pay a dollar for a rental. They demand codes for free rentals.
Lowe doesn’t have a clue. He knows it. The studios know it. ‘Nuff said.
Probably the majority, that is why they are here!!!
I think your comment is reaching a bit, John. There have been a few jokers on here who talk about copying DVDs, only getting movies with free codes, etc… BUT, I hardly think this gives a good idea of the average Redbox customer.
The reality – and you know it – is that 90% of Redbox customers have never used a promo code, nor are they likely to do so. So your little “survey” is irrelevant.
Now obviously the CEO of Redbox isn’t going to say: “Yeah, I admit, we are killing the studios.” But, that doesn’t mean he doesn’t have a clue nor does it mean he is lying. In fact, I am guessing no one has any more data available to them than he does that sheds light on what is really going on here.
I have said it before and I will say it again: I don’t think Redbox is the cause of the studios’ problems. Their problems existed before Redbox, and have only been hampered by the economy and new/increase use of technology. The music business knows the issue all too well.
Does Redbox actually help the studios? I don’t know for sure. I think once Paramount completes their study we will know more, but since they are mostly getting their numbers from Redbox, I don’t see it changing much from what Lowe is saying.
I believe there is one point here that is clear: people are watching more movies than ever through the power of technology. Redbox has without a doubt expanded the reach of studios and their movies, and will continue to do so unless the studios find a way to shut them down. And, if that happens, I am afraid everybody loses, including the studios.
90% haven’t used a code? That would be crazy since most of the machines i’ve gone to have a note next to it with free codes or the person ahead of me feels obligated to tell me his/her free codes.
Redbox Users are always more than willing to share the wealth in my opinion.
The Paramount study should be interesting.
I have *rarely* seen free codes posted on a machine, and I live in the most popular Redbox market in the country – and possibly the cheapest, too! There have even been times when I (and others) have told people about free codes and they simply wouldn’t use it. They thought it was a scam or something…
I did hesitate a bit when I used the 90% figure, perhaps it is a bit less (like 80%). But, the point still stands. Codes are great, but aren’t really an issue here.
I think I have used the free code maybe twice since I started renting. I just wont rent a movie unless its something I really wanna see, even if it’s free.
I think 90% of redbox users don’t even know that you can reserve online, much less use codes.
90% of RB customers are not savvy enough to figure out the internet and it’s many good uses. lol.
I kid, but in the words of ESPN Commentary, “Come on Man”.
These figures are made up in your head just like Mitch’s are in this article. It must be more “market research” that has been done.
You are right, Joey, I don’t have an accurate figure, but I have heard somewhere before it was 80-90%. Redbox knows the exact figure, of course, but I haven’t got an exact figure from them.
Of course, if you want to be fair, you have to admit that all of your figures and “research” are made up in your head, and you have no solid evidence that Redbox is having any negative effect on the studios.
Funny, isn’t it. We have a completely opposite belief based on the exact same set of information. My belief is: Redbox is actually helping the studios make more money and sell more movies.
BTW, there is a new article out today that has some real, concrete numbers in it, coming from a third-party. The post is coming shortly. Either it will surprise you, or expose some of the things you have been saying as outright lies. Only you can know for sure…
Enjoy!
Micheal
I’m sure there is another article comming with all kinds of (concrete) statistics that are going to show red box’s version of the impact. Probabally some big news organization.
Just because it is a news article doesn’t mean it can’t be skewed.
You see michael I remember back in a sociology class I took they told us when ever a study is being done to make sure and ask who commisioned the survey, The purpose of the survey, and the group being surveyed.
I think just the fact that you know about the article ahead of time speaks volumes about the validity of the article and who was behind it being done…
I didn’t know about the article ahead of time. I just found it on the internet. It should be posted here in moments…
BTW, it does not come from Redbox, but a financial analyst.
Funny. I seem to be the only person at a Redbox machine that ever uses a code, when I’m there. Never even thought to use a note to share codes, I might start doing that.
I think 90% is a pretty accurate figure. You know how few people even know that Redbox has a website?
What a load of crap.
Most RedBox users don’t want to go through the hassle to find a code as they figure a $1/rental is good enough.
I have never seen a code note on a machine nor had anyone give me a code. In fact I have had people ask me what I was typing in on numerous occasions and I told them to check out this site and to also sign-up with RedBox for their weekly code (well used to be weekly)
Just got and watched with my free code “Adventureland” It was filmed in the great amusement park, Kennywood, in the greatest city, Pittsburgh,Pa.–so of course I wanted to see it! However, NOW that I’ve seen the movie I would never, ever BUY the dvd. My decision NOT to buy isn’t based on the fact that I used a free code, or if I had paid Redbox $1, or Blockbuster $5 rental, etc. etc. Fact I wouldn’t NOW buy the dvd is because NOW I KNOW the movie pretty much sucked!!! Perhaps the studio depends on people buying without seeing “Adventureland” based on the fact it has “Twilight’s” Kristen Stewart, or perhaps the studio depends on people in Pittsburgh Pa buying the dvd without renting/watching it first because it was filmed in Pgh. And perhaps you, and Joey, etc. can’t seem to understand that Redbox customers, even those on this site, will never, ever spend even $1 on a movie/dvd that they know sucks! Has nothing to do with demanding or expecting free codes/rentals–has to do with the quality of the actual movie/dvd that the studios are expecting people to buy without first trying/renting/seeing. Renting a movie could sway a potential dvd customer to BUY the dvd, or it could sway the customer NOT TO BUY the dvd. The percentage that actually go onto buy the movie/dvd lies squarely with whether it’s a quality movie/worth buying or adding to a dvd collection–as determined by the renter.
This is a similar phenomenon to what the music industry went through.
Used to be to get a song you heard on the radio, you paid for the whole album only to find out much of the time it had only 1 or 2 good songs. P2P and iTunes have meant consumers have much more control and get more value.
The ability to cheaply rent DVDs provides the same benefit to movie fans. No longer must they buy the DVD based entirely on reviews, hoping it’s good enough to watch again and again. The movie industry got used to profiting off consumer ignorance and now that it has changed they are screaming. They should instead be happy they it went on so long.
But if piracy takes a hold like the music industry, where are we going to get our Physical Media?
Can RB or any other kiosk make it if piracy is as apparent as it is in the music industry?
Here’s hoping it doesn’t get to that.
As mentioned by many others here, from what I’ve seen at the actual kiosks, the vast majority of Redbox users don’t even know about the codes–even if other people leave them right in front of their faces.
I do have to agree with you about the free rental stuff though–sometimes the people on discussion boards go overboard about it, and I personally either use the rental codes or pay for the rentals (sometimes both for multiple DVDs), depending on my mood.
This is just another publicity stunt by Mitch just like his web site savelowcostdvd’s. He see’s the writing on the walls after the studios answered his complaint. For every scewed # he quotes on here I can show you an equally impressive one that contridicts him.
The problem is, Joey, is that you can’t show us ANY numbers that point to Redbox being the cause of lost revenue to the studios, and you know it.
Now, perhaps you can show us number that say “DVD sales down xx%, rentals up xx%”, but those numbers don’t show the CAUSE of the trend. Perhaps you can show the studios make less money than they did 2-3 years ago, but again, that doesn’t show us the CAUSE.
Please, show us 100% certified proof that Redbox renting movies for $1 is hurting the studios business at all. Until then, you can claim no more credibility than Lowe – and in fact, a lot less.
Either you (and/or Lowe) are lying, speculating, or both. I have to believe Lowe has access to better information than you, though.
You know, there is such a thing as a “troll”, a person that just gets enjoyment out of posting totally irrational arguments just to get a rise out of people. Not lying, not speculating, no business interest, no motive, they just want to, well… watch the world burn. Best thing to do is ignore them. Maybe they’ll go away.
Michael, do you really think the voices on your site are in the minority?
They have indicated that not only do they think that $1.00 is the proper price for a rental but that they will not buy movies again.
I suspect that the latter statement is very true when it comes to the average Redbox user. If you can access a product for $1.00 (or free with the coupons) then why on earth would you think $15.00+ would be a good price for ownership?
You know full well that Lowe is spinning this as hard as he can but the facts remain that DVD sales have plummeted as Redbox has gained market share. Redbox has devalued the DVD to the point where no one believes it has a value of even $15.00 any more.
This is just spin from Lowe. You know it, I know it and he knows it.
Sorry, but I’m firmly in the corner of people who argue that Hollywood was devalued their own product by producing crap. Without getting into a long, involved argument, if the movie isn’t good enough to buy after seeing it via Redbox, then was it ever worth $15 in the first place?
“Was” in the first sentence should be “has.”
Well said and to the point.
You’re right I don’t buy DVD’s, I buy Blu-ray and pay $25 for a movie. It’s often movies I had to pay $5.50 to $9.75 to see in the theatre. I have rented probably 400 movies from Redbox and spent $150 and the rest free codes. I never usually bought without seeing first. I only used to rent movies I was excited about. Now I try more and buy more.
RedBox doesn’t keep people from buying quality movies. A quality movie being one that people want to watch over & over again. The reason…a RedBox machine can only hold so many movies and they tend to only stock the latest movies. Occasionally they stock some older movies in some machines, but I personally think that’s a bad move on their part. I think RedBox needs to stick with new releases and figure out a way to sell used movies through their machines too (i.e. – after new release has been in machine for 90 days, it’s sold through the machine for x amount of dollars).
Michael
You and I both know that when an article says (market research) you can have it give you the results you are looking for. He knew the results he was looking for before he asked the questions.
You say Lowe has access to better information. The only thing he has information about is how many rentals, what titles, and how many free codes redeemed. Trust me I have known Mr Lowe for over 20 years I remember his experiments with Video Droid and I know excactly what kind of business man he is and what #’s he has access to.
You are correct that there is not 100% certified proof of redbox’s predatory pricing destroying sell-thru. There is only common sense. When you flood a market with free codes, $1 a day movies, and 500,000,000 previously viewed copies of the studios A titles how can it not have an effect on sell-thru?
As far as perceived value it has since redbox started the dollar a day rentals declined. Once again common sense. If you offer a product at 1/2 of the perceived value after a while people will see it as worth that pricing. Of course people will flock to that pricing this does not mean it is not destroying an industry and devaluing a product.
Here is something written that I would like to quote:
Redbox has created a fire-sale environment that has destroyed the perceived value and the lifespan of DVDs.
The claim that Redbox has brought consumers “back into” the DVD market is quite a stretch because Redbox uses close-out pricing to do it.
The bargain is indeed what consumers want, but all of us–consumers and producers alike–know this is laying the groundwork for the demise of an entire business segment. Of course the consumer (me, too!) wants something for a buck. Just ask McDonalds or Jack in the Box…they offer an occasional $1 sandwich to bring people into their stores. But the difference is, they will make additional sales of normal-margin product, and they will eliminate the $1 sandwich eventually. Redbox does nothing but scuttle the marketplace with $1 product that cannot be eventually eliminated and that does not support normal-margin auxiliary sales.
Further, Redbox cripples the indie film industry. This article doesn’t even mention the damage to indies. All of the suspect claims are solely allocated to the Studios. But Redbox destroys one of the major resources for indie films: the rental store visit that provides consumers with a wide variety to choose from, allowing the consumer to discover indie titles. Redbox machines offer only a dozen or so titles per machine, and as indicated in the article, only Studio titles.
But things change. $1 rental machines only hasten the demise of a market that has suffered other assaults and may not survive.
Those of us who want indie films to exist will have to find new markets and revenue streams to exploit in order to attract investors and make more movies.
Right now, Redbox makes a machine that gives Redbox $1 and indie filmmakers nothing. Yes, they are successful. They are fire-selling and killing a revenue stream that had been critical for the survival of the indie film biz.
“Just ask McDonalds or Jack in the Box…they offer an occasional $1 sandwich to bring people into their stores. But the difference is, they will make additional sales of normal-margin product, and they will eliminate the $1 sandwich eventually.”
Yeah like that Double Cheeseburger at McDonald’s which has been around for 8 years at that price.
If Indie films as you call them want to survive they shouldn’t have to rely on Redbox’s rental scheme. They should produce good movies that after renting it, people will like it so much they will want to buy. Ripping the consumer off with a 5 dollar rental is not my definition of the brilliant fix for this. Personally I’m more likely to take more chances renting a movie I’ve never seen before for a buck instead of five. And if I really like it I’ll keep it for more than one day so I can watch it again another time. I remember what happened when I saw “Door in the Floor”, I felt like I was ripped off. I’d felt alot better if I only spent a buck to see it.
I just read your analysts’ comments. The numbers doesn’t look concrete to me. It lokks like it’s an opinion.
Only anectotal, of course, but Redbox has not increased or decreased our DVD buying. We’ve always rented before buying, and only bought films we really loved, unless we came across something we liked very cheaply (DVDSwap, used bins, Blockbuster sales, etc.) I’d think DVRs, Netflix Instant, and OnDemand would have more of an impact.
It does seem like fewer awesome movies have been released in recent years. Not much has stood out as a must-have for us, anyway.
plenty of other things going on the studios threats will get them nowhere
with me.i can wait em out.
i know what is behind the lost of money at the theather…..
they just keep remaking movies from 20+ years ago
Remade halloween. Remade other junk… now remaking STEPFATHER…
hey hollywood you want to make money. get of your #$###$ and start to hire talent that can write new stuff and stop remaking crap from 20 years ago … THey are even remaking nightmare on elm steet…
Sorry but i will rather go to my local video store and rent
nightmare on elm street from what 1984? for 50 cents then pay 12.00 too see someone want a be try to be the new freddy…
Michael
I was very into reading all this and decided to look at some movies’ box office performance. I didn’t put it all to pen and paper but at first glance, starting with Universal, I see a whole lot of box office failures dating way back to even before redbox got big. Now GE has had enough of this once-proud studio and is looking to shed them from their books. I think these knuckleheads at the studios better start worrying about things a whole lot bigger than redbox to save their butts. Some people are going to lose their jobs there and rightfully so. Joey, you’re a smart guy who is driven to find solutions. How about sharing some of your wisdom with THOSE guys too! It seems that a studio like Universal being unable to release anything resembling a successful film will put a lot more of your beloved key grips and cameramen out of work than redbox will. I think you should try looking a little higher on the foodchain than a fad operation like redbox.
Redbox got me back into even renting DVDs again (I haven’t bought a DVD in years–not worth it), and I’m sure I’m not alone. I really hope the movie studios aren’t stupid enough to drive away a large part of their own customer base, because if they think it’s bad now, wait until they force consumers to choose between either no DVDs or an absurdly overpriced $20 product–I’m guessing it won’t be pretty.
Ditto…
You are NOT alone.
And frankly I don’t care what the movie studios do. If every movie studio on the planet goes out of business I will find something else to do rather then rent a movie for a buck. They can stick that in their pipe and smoke it.
A couple of points…
1. “Redbox made me rent movies again.” This is a quote that i’ve heard from numerous friends and family of mine after staying away from renting movies for years. I’ve also seen this quote quite a few times in this thread. Why RB? Well, the $1 price point and the convenience of returning the DVD to ANY Redbox location. Most of my friends and family are working-class people that can’t afford to pay $5+ for three new release movies a week.
2. “The studios are putting out worse movies than in years past.” I’ve seen this quote above and heard it from others. I’ve even said it in a previous thread. It seems like instead of worrying about the actual QUALITY of the movies they’re putting out in Hollywood they’re more worried about the QUANTITY of movies to bleed the consumer dry. There have been very few actual good movies this year. In fact, had it not been for Redbox, I may not have bothered to see these crappy movies at all. Also, with all the sorry excuses for movies that have come out this year, why would ANYONE want to spend $15+ and turn their living room into a DVD warehouse with the crap movies that Hollywood has churned out this year? At least with RB, if you don’t like the movie, you can return it…If you buy it, then you’re stuck with it and out of $15 that could have been spent on other more important things like food and shelter.
I used to tell people about this site and the free code and such, but now ever since they got rid of most of them I keep my mouth shut. I promoted and got people into Redbox then got rewarded with the loss of codes, so that sucked. I am still very happy to have $1 rentals. I don’t have a problem paying. I am just way more picky then. There just isn’t enough good movies anymore!
I don’t think I will post any notes with free codes on Redboxes, I always think of giving out codes to people I see at the Redbox, I consider exchanging a free code to get a cut in line…but then I figure someone has to pay Redbox in order for me to get my free movies.
So instead I email all my friends that use blockbuster, netflix, etc. all the free codes as they come out…
I’m doing my part to introduce people to the service, that way they can always be around for me to take advantage of!
How did the movie studios make their money before VHS, DVD, Bluray, VOD, etc…?
They made great movies and showed them in theaters. Nobody is forcing them to release it to DVD. If it is a wonderful movie then keep it there and make your money. Releasing it to DVD is just additional revenue for studios. Stop the madness.
Exactly! The studios didn’t turn out as much crap as they do now. Why – because they had to turn out a quality product or fear not making a profit. If the studios were smart, they would be sure to turn a quality product out, show it in theaters, make sure they turned a decent profit from theater showing alone, then if they come out with a DVD – it’s just a little icing on the cake.
your an idiot and know nothing about the movie business
Many a time I have given the little handicap person begging for change on the side of the freeway a dollar. So the whole promo code thing, kill it.
A movie for a dollar? To view a recently released movie for a dollar? The promo code freak is a thief. Might as well get a torrent program, and download all your movies and sell them on street corners like the bootleggers. Consider the promo codes a bonus to the great deal you’re already getting….a dollar. The studios against RB, are just haters of success. The ones who aren’t see the light at the end of the tunnel and were they can go too.
Yes the world wants to see what they invest in, and to spend a dollar now, to help make a decision whether to spend $20 later, is much more attractive than spending the $20 upfront not knowing if you’ll be satisfied.
All studios should wake up, and roll with the box, besides I don’t even go to the movies anymore, they make HDTV’s as big as movie screens now for your home. Everything is more “home-based”, so this is where we’re going, keep up with the times sleepy people.
I love redbox. end of story
I love peanut butter and jelly sandwhiches.
I do too!!
But, I do think Redbox does hurt DVD sales. I also think that’s kind of the point. Why pay $17 or more for a new DVD when you can try it first for a $1??
Hopefully Redbox continues to provide such a great service.
As for the codes, I have to agree that most people do not use them. I do when they are available, but if one isn’t available it doesn’t affect my decision to rent. After all it is ONLY a $1.
Maybe people are not buying DVD’S b/c of the economy!!! Cheaper to rent a DVD at $1.00 than pay the price of a movie ticket or price of buying a DVD. A lot of movies are highly promoted—but are total flops. If you purchase a DVD’ it means you’ll watch it more than ONE time–I don’t watch movies more than once!!! Children watch movies over and over again!! Some movies aren’t worth $1.00 rental fee. Maybe Hollywood should pay actors less and get rid of their union employees!
the studios need a refresher course in econ 101. they are paying way too much to make movies.
I have to agree. I have a 23 year old son. After watching a movie he really likes he will by it within a week. I use Columbia House and will often by a movie I like through them or on sale locally.