For the first time in eight years, Redbox has increased its price nationwide for DVD rentals. But will the increase have a negative impact on the company’s reputation and bottom line?
Joseph Poma, an investor with SeekingAlpha.com, doesn’t think so:
“A 20% increase in price for the [Redbox] customer is negligible when in actual dollars, it is a 20-cent-per-night increase . . . For Coinstar though, a 20% increase in price will yield a tremendous increase in revenue over the subsequent quarters. I don’t anticipate any drop off in sales due to the price increase, and I anticipate increased growth even during the holiday season.”
One thing that might help cushion the impact of the Redbox price increase is its (possibly suspicious) timing. The price hike comes at a time when Redbox rental rival Netflix is reeling from a series of missteps that have burned up a lot of customer goodwill. So surmises ZDNet.com writer Sean Portnoy:
“Redbox may be a little sneaky trying to drop this fee increase in while one of its main competitors is suffering a PR disaster for raising rates, but that’s also a good way to avoid some of that same heat,”
We asked last week if many Insiders were planning on altering their Redbox rental habits because of a 20-cent price increase, and the results were decidedly mixed. What do you think will be the prevailing consensus of the public at large?
(via Home Media Magazine)