I have been seeing reports over the last few days from commenters gman69 and ladoblaze that they are seeing a price increase to $1.15 (+tax) per night in their area. This comes after other price testing late last year.
Ladoblaze says they are seeing this in Washington State – are you seeing this in your area?
While price testing is nothing new, it does come as a bit of a surprise so close on the heels of Redbox’s recent deals with some studios that put a 28-day delay on new releases, and after Coinstar reported a tripling of profits over last year.
Some critics of the Redbox business model on this site believe that Coinstar may be using some creative methods to hide the fact that Redbox’s important “profit-per-kiosk” numbers are actually sliding as of late, even amid the rising profits that are being reported. Could this be the reason for this 15% price increase? If prices went to $1.15 in your area, would that cause you to think twice about picking up a rental?
With competition heating up from Blockbuster Express in some areas, it looks like we may have a fight for marketshare on our hands. And, as long as NCR has the smaller operation, they can continue their workaround to get new releases on the day they come out, bypassing the embargo. Many of our users who were previously loyal Redbox customers are jumping to Blockbuster Express due to this reason, and the fact that promo codes are more abundantly available for the service right now.
What do you think: Could Redbox – even with a massive 20,000 kiosk head start – be in for some serious competition here? Will price, promo code and new release advantages cause you to seek out Blockbuster Express whenever you can? Let us know your thoughts (and if you have seen this recent price increase) in the comments…
I dont rent much, but when I do I want convenience, good selection, and best price.
I have no loyalty to any company or product. They dont care about me as a customer, they only care about the profit they can make off of me. So I will take what the best offer if for the product I want. If Blockbuster Express is convenient to me and their price is the best, Im going there.
What happened with redbox’s variable pricing model test?
It would be child’s play to have a mixed price model at the kiosks just like retail DVDs aren’t “one price all”. As an example, BDs could command a premium price and redbox Replay a discount. Newer releases or commercially successful titles in theaters at a premium and direct-to-video titles discounted.
Don’t consumers generally equate price to quality?
For those that are “jumping” to Blockbuster kiosks, just remember that they’ve been gouging you for years and likely will do so again when its convenient for them. I haven’t used Blockbuster Express but I like the Redbox experience and functionality (like reserving at home then going to pick up) and 15 cents wouldn’t make a difference to me.
If BBE (bluebox) fails, there will be no competition for redbox and then prices will go up arbitrarily; same goes for Netflix.
That’s exactly why i’m using all the free codes I can get from bb express. To try and recoup some of the costs they charged for all those years! I figure they gouged me for all those years so i’m going to gouge them back as much as possible!
netflix has been the best value so far. I used to get from redbox, but I did not like to have to go all the way in the store to rent the movie. The local vidio store was outragious and when blockbusters blue box came to town I got excited, but I have had nothing but problems with BB. I would go to pick up an online order and it would not read mine or anyone elses card. I would go and it would be shut off. or I would get there and it would be restarting and that takes forever. One time I took movies back and the machine would not take them. I used different ones so it was not just one machine.
Mike,
BB Express is Blockbuster in name only. The name is licensed by NCR that owns BB Express and the kiosks. So, $1 per night doesn’t seem like gouging, so I’m guessing your;re talking about the Blockbuster stores.
You have to be careful here…15 cents for now…And 30 cents next year…Before you know it, it will be $2.99 soon. This is a tactic to generate profits for all companies – Just like gasoline prices.
The best way to avoid this is not to rent movies during their study with increased price. That would tell them that it’s not a good move as they’ll lose revenues/profits by increasing the price. Their goal is just to make more money and be more profitable. Keep in mind that I sais “more”, not because they don’t make money now.
Supply and demand. Price hikes are inevitable once the competition is gone, which it basically is. Walmart has the same business model: Drop prices, drive out the competition, corner the market, dictate prices.
It’s only 15 cents what’s the big deal? Blockbuster stores charge $4.00. Don’t have a Blockbuster Express anywhere near me. I have an NCR DVDPLAY but they usually have a crap selection and Redbox is all over the place so I can return it anywhere. Won’t make any diff.
if you guys think the studios are done squeezing redbox and netflix your crazy. these windows are just the beginning. google search mark cubans blog he has an excellent article about how netflixs business model will not suceed and how the future of tv is tv not streaming or cord cutters or $1.15 kiosk rentals or whatever the price is going to raise to now that they have market share.
Oh the studios have been playing nice over the past two years right? Now they are going to get really tough on these two. LOL.
Who cares what Mark thinks what’s your vision of the future?
‘Some critics of the Redbox business model on this site believe that Coinstar may be using some creative methods to hide the fact that Redbox’s important “profit-per-kiosk” numbers are actually sliding as of late, even amid the rising profits that are being reported.’
CAN ANY OF THE ‘CRITICS’ POINT OUT WHICH CALCULATION THEY USE TO DETERMINE THAT PROFIT PER KIOSK IS SLIDING OR CLOSE TO ZERO?
Seriously FLON, can you find a calculation that doesn’t show them to be sliding?
‘As long as Coinstar is not playing games with their YOY deprec. calcs, you are correct that they are making a profit on a per machine basis.’
Well it took a week and it was painful but you did admit the truth finally. The kiosks do in fact make a profit.
‘That profit has fallen from last year. You know this. You don’t want to admit it but you do.’
‘Seriously FLON, can you find a calculation that doesn’t show them to be sliding?’
Your flip-flop is duly noted. Instead of proving your point you are slithering away once again. Does that sound like a truth teller to you?
Here is the link you need to figure it all out. It’s really quite simple.
http://coinstar.com/us/Webdocs/A5-1-19
Go to the investor update page 6 & 7.
For Q1 2010 take the DVD segment operating profit of $44,834,000 and subtract out the DVD segment depreciation of $22,171,000 to get redbox’s segment operating income of $22,663,000. This is operating income after depreciation expense. Now divide that by the average number of kiosks for the period of 23,600 and that comes out to approximately $960 in operating profit per kiosk for Q1 2010.
For Q1 2009 take the DVD segment operating profit of $20,830,000 and subtract out the DVD segment depreciation of $13,045,000 to get redbox’s segment operating income of $7,785,000. Again this is operating income after depreciation expense. Now divide that by the average number of kiosks for the period of 14,550 and that comes out to approximately $535 in operating profit per kiosk fro Q1 2009.
At this point you can see that redbox’s operating profit per kiosk in Q1 2010 actually improved rather substantially over the prior year’s results. This is mostly a function of the average age of the kiosks stretching out. Redbox kiosks ramp up revenue over a multi-year period so the impact from aging is quite dramatic right now.
Unless the company is reporting fraudulant numbers there really is no other conclusion.
As I said before low margins are fine. Video stores have high gross margins but tons of overhead. Redbox has low gross margins but little overhead. One can survive on very little business, while the other cannot. This is why video stores are closing and kiosks keep opening.
Well, you could calculate it that way. But if you did, you’d be wrong.
I’m not wrong, you are. You cannot provide a single shred of evidence to back up what you claim. You are being intellectually dishonest. You mix truths and non-truths in your posts which is the worst of all. And again I challenge you to support your claims with facts and formulas. You can’t right so you won’t.
I wasn’t aware of all the manipulation the VBG has pulled here in the past. Pretty pathetic.
Again, if you want to look at only the segmental info which does not include all of the costs of running Redbox you will end up getting the wrong numbers.
Your choice, your investment.
Truth teller – what you said makes no sense and you still can’t use any numbers to back your claim of falling profits at Redbox. Can you take my numbers and show us what the proper methodology is?
If it wasn’t obvious before it’s very obvious now that you are spreader of misinformation. Pathetic.
If you are basing your info on the investor update, you are looking at the wrong financial information.
For a better idea, look at their actual Financial Statements filed with the SEC.
I used both. Segment information is better in investor update. I assume you can’t make JS’s point either.
So your answer is to take the simplest solution which provides you with the numbers that you like and declare things good? Your calculations are as simplistic as just dividing net income by the number of machines. Neither presents the total picture.
If you ignore the fact that Coinstar does not include all of the expenses and costs of running Redbox in their segmental info then you will get a skewed result as you did.
The depreciation number is the variable, been in this business for a long time and depending on what you want out of your bottom line this percentage can be manipulated. If they wanted to they could have easily shown a loss.
Wrong. If you were to add up all the segment operating profits you would note that it is very close to the income from operations line in the P&L. Unless you want to accuse the company of intentionally misallocating expenses your point is mute. Do you have any evidence of this? Note this is still before adding one-time charges back which makes redbox’s Q1 numbers even better.
As far as depreciation goes there is no variable here. The units are depreciated at a consistent rate. Again fraud is always possible but that is another discussion.
I note your continued lapse in offering a quantitative solution to the point you made about lower profits year over year. You are as shifty as they come. Why note take a few minutes and prove your point or are you unable to use numbers to make it?
I hope no misallocation is being done (although Tee’s point regarding the degree of deprec should be well noted). The point is that Redbox is just a subsid of Coinstar and that there are expenses outside of their segment that are still related to the cost of running Redbox but are not allocated to Redbox. If you simply use the segmental numbers you are not getting the real totals.
If you wish to remain willfully ignorant that is fine. You are the one risking your money on your investment in Coinstar. The facts remain the same as they were before.
So slippery…so how do you get the real totals then to say with confidence that profit per kiosk is lower year over year?
You really can’t figure out what percentage of the remaining costs are likely attributable to the operation of Redbox?
Here is a hint. Most of them.
You are fabricating again. Any remaining costs are not big enough to directionally change the year over year improvement redbox had. And again this is before one-time charges that make the improvement even greater. Also before averaging into the mix the new, lower revenue, lower profit machines that are less than 1 year old which further enhances the improvement of the other machines.
Please share your analysis since you made the original point about almost zero profits (which you’ve now backed away from) and year over year decline in kiosk profitability. Don’t you have any game? Share your analysis that shows how bad things really are.
Seriously, Again?
Why is it that John Small & Firstlawofnature are always at each others necks? Why can’t you just agree to disagree?
You seriously can’t believe what you are saying FLON.
Well if we were arguing about the future effect of the 28 day delay we could agree to disagree. In this case JS is trying to make a point that last quarter showed that Redbox is a declining business and that’s just not true. I’ve used numbers to make my counterpoint and he is unable to support his claim of falling profits at Redbox with anything concrete. I’m all for dropping this topic. The shares have skyrocketed since he started trying to convince everyone here the quarter was a disaster.
A fool and their money….
I did not say they were a declining business, just that the money in their pocket, after everything is accounted for, is less on a per machine basis than last year.
That is self-evident to anyone who has a modicum of mathematical ability or common sense.
The fool was actually the guy looking at you while you were brushing your hair this morning. The shares have probably added about half a billion in value since the terrible first quarter so if that was so bad bring on more. If you ever you want to share your simple analysis that shows the declining profitability of the kiosks I’m all ears. Until that time I’m done on this string.
Was that you? Sorry about siccing the hounds on you but you should have rung the doorbell.
Look, 15 cents is nothing. How long has RB been in business at $1, five years, six years, something like that? Can you name any other company which has stayed constant while price of labor, fuel, etc goes up continously? As the cost of living rises, so do the products which we buy. It costs RB more to deliver the product to the machines then it did when they started. To stay on top of that, they have to raise prices at some point. 15 cents? No big deal to me. $2-$3 for a movie? Yeah, thats when I’d stop renting altogether. I just checked my bank account, and as it turns out, I can handle the 15 cents, although it hasn’t hit my area yet.
Anyone moaning and groaning about this needs some serious mental help. Its 15 cents people. Keep in mind, in the time RB has been in business, your price for gas has more than doubled. I’m paying $3.25/gal. I only WISH it had only gone up 15 cents over the past 5 years.
Exactly TB. People should be happy that Redbox is taking steps to make their company profitable.
While I agree with you that 15 cents is not much I think people look at it as 15% increase ($1 X 15%= $1.15) Also Coinstar made 300% increase in profit in the last 3 months. One more also Blockbuster express is at $1.
Supply and demand. If movies were a necessity, like gasoline, then they would hike their prices more. I agree that 15 cents isn’t anything to throw a fit about, but I think that a comparison to gasoline is unfair.
kiss my a** RED! coinstar CEO already greedy! use BLUE! screw RED!
Yes, we all know that Blue (Blockbuster) has never been greedy and always has charged fair prices……I’ll never use blue, I gave blockbuster a chance but they are money hungry and after closing out the competition with Redbox they will jack up the prices again so they can handle their debt at the expense of people like me.
I noticed a Redbox rental price today of $1.25 at a Ralph’s grocery store in the San Diego area. The one at the Albertson’s store about a block away is still $1.00.
Redbox is testing multiple price points across the country. They still are charging $1.50 per night in Albuquerque, NM which has been the price for the last 6 months. However Redbox was testing $2.00 per night in Harrisburg, PA and that changed back to $1.00.
My guess is Redbox will increase to $1.25 to $1.50 in all markets where there is a large market share and the kiosk is well established. This also helps with Blu-ray when it gets released nationally. Look for $1.50 to $2.00 per night for that.
Redbox needs to stay at a $1.00 a night.
If redbox stays at $1, they won’t be able to make it. With all the rising costs, you’ll see them fold. As for blockbuster, they too are experiencing higher costs and will raise prices when/if rb does. How much do you think it costs to build a machine like that? 50k? 60k? Thats a lot of one night rentals just to pay for the cost of the kiosk. I bet you it takes 3-4 years of the machine being in place before its paid for itself.
Prices up 25% in Carlsbad CA.I am not renting until they drop.I complained and they sent me a free rental but the code was “whiner”.I can watch movies online for no extra at Netflix.I agree with tlochner.You said it buddy.
I thought the whiner thing was funny though. Where can I find a BlueBox in the San Diego area ..anyone?
thers only 2 in
Chula Vista, CA at Rite aid
740 Otay Lakes Road
Chula Vista, CA 91910
and
2230 Otay Lakes Road
Chula Vista, CA 91915
they can raise it all they want! if you get enough credit cards and promo codes list price doesnt matter!!!! it is FREE!!!
i will stick with FREE!!! and i like BLUE better!
there are promo codes here that would allow me to get 20+ movies for free!
i dont need them. i’ll take BLUE for free … i wont even take RED for FREE anymore!!!
raise it to $5 a night then even the blockbuster stores
can stay in business!!! lol!!!
ok tlochner
you really should try and hide your BLUE affiliation a little better if you want anyone to do anything but chuckle at your posts…LOL
Next time be sure to include the link to their website if you’re gonna be so blatant….marketing 101
We live in WA state. We rented movies last week at 1.00, last night at 1.15. We were not advised of the increase, but it shows at check out.
Redbox is now up to $1.50 in Albuquerque, NM area. They said that we were in a test market and said it worked so they are keeping the new price. It has been this way for about 3 months
no price change in huntingdon, pa
Buh bye Redbox!
You were good while you lasted but you sold out to “tha man” in Hollywood and now are useless.
Say goodbye to those hefty profits as everyone jumps ship as we are not bungling idiots who will continue to utilize your service.
Especially when you went from something good (new releases) to something worse and are even charging more now!
Blockbuster has the incentive to make sure their kiosk business doesn’t fold like their brick and mortars did so they have more at risk and more to prove.
i dont mind 15 cents or 25 cents if they had decent new movies
so far only old movies and i go elese where to rent them do not want to wait 30 days for them
john t. virginia beach va
I live in the Seattle area and have been charged $1.15 every time. I have only been using RedBox for about 6 months. Still a good deal. Incidentally my Dad lives in WA state also but in a different county and only pays $1.00. I do not like the 28 day wait for new releases. Last thing, a friend of mine just told me about a web site called Dave’s movies which has current releases for free. Terrible quality but I watched Iron Man 2 before it came out.
$1.25 in San Diego, CA now.
Although Blockbuster has been charging more (for new), I think it’s time to take another look, since the selection is so much better.
Use Netflix streaming.
I dont mind payomh 15 cents more because i dont rent movies too often as long as i get my free movie every 1st monday of the month..BUT they are freak*n A**holes they wont give me my free code because my cell phone carrier is not an optiona so i called them and they pretty much said TOO BAD!! NO FREE CODES FOR ME!!! which is why im going to BOYCOTT REDBOX, they dont care about their customers anymore like they did at first.
They are A**holes,and rude to boot.
I just moved from Chicago (Crook County) where Red Box movies are $1 rental. I was surprised to see on Albuquerque, NM that the kiosks advertise $1.50. however, when I rented one movie, it showed up as a “hold” on my credit card for $1.00. My friend, who was laid off, still gets her movies (up to 6 with a 7 day return) for FREE from the Public Library. She reserves the new releases in advance. Seems to work for her!
Just checked. Yup. We’re up to $1.15 in Ellensburg, Central Wash. Sure it’s not much, but it’s the principle of the matter, and it only goes up from there. We know they’re making a profit, so this is just screwing with a good thing. Glad I can stream Netflix. See ya, Red!!
It’s the credo of business that you fine a price that the market will tolerate. If the means increases, so be it. They may try to justify it by stating the necessity of their price increases, some maybe true, some fabricated. Because consumers do not have any organization, union, or collective representation, we are much like the cattle in the pens of the meat packing house, waiting around for our keepers (aka: Big Business) to decide our fate…
Price hiking is a lot like gold mining: You keep seeking until you hit paydirt…
Groucho
I agree with Groucho, even if he is a little pessimistic. If consumers had a union, it would only be a matter of time that the forces negatively influenced by it would figure a way to subvert it’s operation. Perhaps by buying off the management…
See, I can be even more pessimistic than Groucho…
Business is a game between how much money will we charge, and how much money will they pay…
Your thoughts…
Suborasarus
I think you people should start a boy cott these red boxes.
Yep!
Can FLON and John Small go away and enjoy their own blogosphere and leave the rest of us poor nicompoops who wish to offer each other small h’dourves and tidbits without the oneupmanship? We get it, you guys are brilliant, bravo. If you’re the producer John Small, fabo. You made your little mark in country music and now you want to be a biggie with Inside Redbox…whoopee. Go get your own site, take the brilliance with you and begone already…
Not sure what they problem. If you wish to remain ignorant about the entertainment industry then coming to this website was likely a mistake for you.
If all you want is little coupons so you can save your dollars then don’t bother reading the comments.
Otherwise, it is a free country with free speech and really you should know better than to ask anyone else to shut up unless you do it first.
sure its a free country but when the insiders gave you and flon the red thumbs down which all you needed 6 to hide your coments you two pleaded with micheal to change this feature now you have to get 30 thumbs down to hide your post , before all you needed was just six red thumbs. i guess you two like to read your posts over and over again , mike let the insiders vote if they want to read their post go back to 6 red fingers let us decide you know this is a free county vote!
I agree this is getting silly. JS made a claim and I’d love to see him back it up with numbers like I did. His reluctance to do so is telling. Perhaps the site administrator might encourage a process whereby each viewpoint is examined and supported with facts and numbers to back it up. This site is clearly not only for everyday users of redbox so perhaps it would be appropriate.
Btw JS thinks all redbox users are cheap. I think they are smart for saving money.
No reluctance. The problem is that Coinstar does not report their numbers in a complete segmental form. They have no obligation to do so but as a result, estimations must be made.
You’ve chosen to ignore those costs completely.
Hows the weather out there today?
Cold, cloudy and rainy. Hoping for sunshine tomorrow. Thanks for checking.
I would jump to if Blockbuster Express was available here in San Antonio, TX.
Instead I go to Blockbuster since I have Rewards membership and rent Monday threw Wednesday with every pad rental at 3 days for $3 I get an older release for free.
I am in the Albuquerque test market and thier little $.50 price hike is enough for me not to rent from them any more, I haven’t in months and I don’t see that changing. They had a good thing going at a $1 per but now RB is now an also ran. I am thinking of going to Net Flix or someone else now that its much easier to see web stuff on your TV’s.
What’s happened here in No. Calif. is that nearly all of the Blockbuster and Hollywood Video bricks and mortar stores have closed due to the unsustainable competition caused by the stand alone kiosks like Redstar and Safeway’s system. What I’ve noticed (and correctly predicted some time ago) is that now that the stores are closed, Redbox is raising their kiosk prices and cutting their promo codes. Hmmmm. Coincidence? I think not. Blu-Ray discs are now over $2 with tax. Another thing that mysteriously is happening more frequently is the boxes are reported as “full” and cannot accept anymore returns (especially around the 9pm cut-off time). Or, when you go to return the movie around 9pm, the machine will go down or offline, causing you another day’s rental charge. Watching this whole thing unfold has been a classic businees-econ case in eliminating your competition, and then, once your competition is eliminated, raise your prices. Yeah, that’s how you do it!
Boycott!
I agree. I dislike any company that forces the consumer by “bait and switch” tactics. I was hoping to feel loyal to Redbox, but if that is their plan then they are no better than the other High prices movie rental stores. They have turned a huge profit. Why not be able to continue that profit AND create loyal customers by not taking advantage of them. I hope the decide to take the high road and be a different kind of company. Maybe that way they will last longer, continue to make an income from the same people and actually offer a service that is good for the consumer as well. Don’t raise prices. The $1 machine work. Why mess with a good thing?????
That seems to be the way they do business. Give the people the best prices, put the competition out of business, then raise the prices, giving the customer no choice but to pay the high price, or just don’t rent from them. I think when the time comes, if we want to control the prices, we just do not rent, until they lower the prices to what they were originally. We have the control, and if we don’t exercise that option, then we get what we deserve.
In fact, if you go to the library, the have dvds you can rent for a week at a time for FREEEEEE…..All you need is a library card.
Yeah, many of us have rented from the library, but it’s not like you can go to the library the day that Avatar Blu-Ray’s released and claim a copy. That’s fantasy thinking. More realistic to have to wait at least a month or two (or even longer) for movies to hit the library–if certain titles hit the library at all. Many libraries are not hip to Blu-Rays yet. Also, several libraries are going through tough times with all the municipal funding cut backs, so you can’t expect them to be up-to-date with all the larest titles.
I rent from my library over Redbox or blockbuster. I can get a movie the day it comes out or even most times before it comes out. I don’t know how they do that part but they do. It is only a dollar to rent the dvd and you get to keep it for two days. And another factor that has Redbox beat is that they have almost 3000 dvds to choose from.
tparral north carolina.
Tracy, are you talking about the Public Library? If so, I envy you. My local library only lets you check out movies and of course most of them have been around FOREVER!!! But, I guess if you want to see a classic movie that you don’t own and can’t find in the video rental stores then its a good alternative. I hope someday my library will take a cue from yours.
Yeah Tracy, I would have to believe that renting a new dvd release BEFORE it’s officially released by the studio from a library would probably represent a tiny fraction of all the libraries in the U.S. (like, < 1/2%?). I probably would go so far as to say that I wouldn't even announce this on a public forum.
Here in Prince George’s County in Maryland (East of Washington DC), I’ve noticed something interesting … the prices for rentals is still $1, but some machines are charging $7 for the used discs, which is definitely higher than the $5 they were charging for used movies when I lived in Denver.
because they suk they like to read their own posts flon and john small they should just email each other but i guess michael thinks they bring in more people to read their rants just my 2 cents
$1.35 with tax here in California.
We got only the two films we wanted. I don’t like the cutthroat practice of putting every possible competitor out of business and then dictating the price.
There are no good guys under capitalism. Every business is a psychotic greed machine. Enough is never enough.
My partner said we should boycott until the $1 prices return. I mean, they’re just movies. Right?
I hope if they raise the price they make it apparent on the machine, I would not wish to pay more, but being left with the Blockbuster Alternative, I had troubles with the NCR machine when I tried it, It was in a Hurry i guess and didn’t let me finish putting in my Email address. The NCR machines in my town are always INSIDE Publix Supermarkets, even though Redbox has some Inside Kiosks there are alot of Outdoor Ones here, the Outdoor ones are most convieant, also I like the ability to return movies to ANY REdbox, something I don’t think can be done with NCR’s, but I could be wrong,.. As for the PRofit per Kiosk, I do believe that it is Sliding, but I also think it’s a WASH, as New Kiosks are being put in people might use Different Kiosks that would lower the Profit in the ones they used to use, but Redbox still gets the Profit in the New Kiosks,..
Here in my town my neighborhood is SATRUATED with Kiosks, I can go in any Direction and find MULTIPLE Kiosks,.. I guess this is a Good thing for Redbox and it makes it very Convieant for me especially if i have to Search for a Movie that is not in my usual machine and go to Another Machine,…
I don’t wish anything bad for NCR or Blockbuster but I do hope Redbox’s prices can be Held down, this is what makes them Attractive to me..