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Should Blockbuster buy Redbox?

Chris over at the NewTeeVee blog wrote an interesting post about the scenario of Blockbuster buying Redbox. Here is an excerpt:

Blockbuster needs to do something to juice up its business because Netflix is eating its lunch. But getting into the hardware game will be an expensive endeavor, especially in an increasingly crowded field already packed with big names like Apple, TiVo, Xbox 360, Vudu and soon the Netflix LG box.

Finally, by leveraging the existing Redbox kiosks in non-video locations like grocery stores, Blockbuster could take advantage of impulse renting. People are already used to the idea of DVDs being sold in supermarkets, this would nudge them a little further and into downloads.

While an interesting idea, I don’t think its going to happen. I left a comment there, and agreed with frequent Inside Redbox commentor Davis Freeberg: Blockbuster cannot afford Redbox.

Redbox is too valuable right now and already has more locations than Blockbuster. While the rent-by-kiosk space is still relatively new, it is gaining a lot of users for its convenience and low prices.

Redbox just needs a new website that is easier to use and more “web 2.0”, and they will likely be unstoppable. If anyone from Redbox corporate is listening – I know what you need to do, and am happy to share that with you, if you are interested.

In any case, what do you think: Should Blockbuster buy Redbox? Should Redbox let them?

I personally think there is a better combination, and I will post about that soon…

34 Responses to “Should Blockbuster buy Redbox?”

  1. Visitor [Join Now]
    David [visitor]

    I agree with many of your points and am curious what you think the better combination is. Another question may be why would McDonalds/Coinstar want to sell?

    Here is one potential buyer: PayPal/Ebay. The purpose would be to showcase mobile payments.

  2. Visitor [Join Now]
    Derffie [visitor]

    You have this backwards.. Redbox should buy blockbuster.. convert all those Blockbuster retail outlets into Redbox lounges by installing like 10 networked Redbox kiosks inside each to keep offering the full blockbuster selection and just doing away with the staff.. put in a sofa and a widescreen so folks could watch trailers at their leisure….. then in phase 2.. Redbox sells off all that commerial real estate wtih one requirement.. Redbox can maintain at least one kiosk at that site forever..

    The benefits.. Redbox makes a big splash converting all those Blockbuster signs.. and makes serious money from the staff downsizing.. and then makes even more serious money from selling off the prime real estate …

    • Visitor [Join Now]
      Damien [visitor]

      Look at you’ll….Your wanting to take away more jobs from Americans and give more to the already rich corporations! you people make me sick!

  3. Visitor [Join Now]
    Mikey [visitor]

    Don’t make a deal with the devil, Redbox.

    I like you just the way you are.

    Love,
    Mikey

  4. Visitor [Join Now]
    Adam [visitor]

    Well, I just started using Redbox a few weeks ago after seeing it in Wal-Mart and hearing friends sing its praises for over a month. I decided to give it a try – and I love it! Now I’ve got more friends started using it too!

    See, I used to work for Blockbuster and it was during that transitional time when they got rid of “late fees” and started Blockbuster Online and all that. I remember the first day I had to sort out all the returned-by-mail movies and get new ones ready to be shipped out. Blockbuster has definitely TRIED to keep up with progress. I’ve even had their “Rewards” program for the last 2 years and got more than my share of free movies every month (without buying anything more than the $10 Rewards card – I learned a few tricks of the trade).

    But with all that, I can just say that Blockbuster is going down. Their prices are sky high. Their selection is still the best (for non-online vendors), but you can buy an old movie off eBay for the same price you’d rent one there.

    I agree with what someone else said, Blockbuster shouldn’t be able to afford Redbox. Redbox is just so much better. If Blockbuster DID manage to buy Redbox, they’d probably jack up the rental prices.

    The idea of Redbox buying Blockbuster and converting all the Blockbuster stores into Redbox lounges really isn’t a bad idea. That’s the only thing Redbox lacks – a decent selection of older titles. For probably a small rental price (or more crowding of current locations), they can have specialized Redbox kiosks, like “Classics” (meaning all good older movies, not just movies from the 50s), “Sci-Fi”, “Action”, whatever. They still wouldn’t have to pay employees (beyond the basics), but they’d be able to further eat into Blockbuster’s customer base that way and gain more loyalty from their own customer base.

    Anyway, I think Blockbuster would mess up Redbox if they bought it. But I think if they don’t, they’re going to lose in physical retail too. I just think Blockbuster’s a sinking ship and redbox is an awesome breath of fresh air (if only it had a wider selection!)

  5. Visitor [Join Now]
    Brian [visitor]

    The lounge idea sounds great. You still could have the lounge managed by and employee or two (one during slow times, two at peak). They could be Movie Experts or something along the lines of the Genius from the Apple Store. Besides monitoring the kiosks, they could be there to suggest films. They also could sell the extras like sodas, candy, chips, etc.

    The idea of having kiosks for new releases, comedies, classics, dramas, indies, foreign, documentaries, etc. is great. But, another great thing would be game kiosks (360, PS3, and Wii).

    I also think that you could do a unlimited package with kiosks, where rather than pay $1/day, you simply pay the monthly fee.

    One other possibilty (and McDonald’s wouldn’t like it) would be for Blockbuster to sell dinner to go (pizzas — perhaps just take n bake) inside their stores, with the kiosks in what normally would be the dining area.

    Regardless, I think Blockbuster ultimately be forced to change the direction with its B&M stores. This would be one way to change their footprint.

  6. Visitor [Join Now]
    Chiunta Chen [visitor]

    Redbox doesn’t need blockbuster to grow their business. Their kiosks are better business model than any traditional video store. What Readbox needs is securing strategic locations where traffic is stopping, like airports, hospitals, gas stations, places outside all the hotels and motels, any places where there are people waiting for unrelated services and having time to kill.

  7. Visitor [Join Now]
    Christy [visitor]

    NO, NO, NO…it would be a tragedy to sell, in my opinion. I agree with Mikey above…we like you just the way you are!

  8. Visitor [Join Now]
    GT [visitor]

    NO NO Do not sell…. When you on a budget $1 won’t hurt, it’s well worth it for children to be happy about REDBOX movies. THANKS

  9. Visitor [Join Now]
    eliza [visitor]

    nooooooooooooooo REDBOX it’s just fine the way it is, i try blockbuster before and i didn’t like it at all, in the other hand i love redbox and would not change it for nothing!!! Redbox is just so much better.

  10. Visitor [Join Now]
    debra [visitor]

    Please listen up folks…………NO! No Way! No Way in Hell !!! Should Redbox sell………………..just keep improving what you already have to offer and forget Blockbuster, unless Redbox has a desire to purchase Blockbuster/Netflex to enlarge Redbox’s service/business. For now we love you Redbox just the way you are……..

  11. Visitor [Join Now]
    Tina [visitor]

    Blockbuster needs competition.
    If they bought it, I don’t see them keeping red box the way it is. I see them increasing the prices or trying to monopolize more control in the industry and keeping prices high, which is not what they need to do. Their consumers have lost faith in them because of how they pinch pennies in the past… Had they thought of the everyday consumer more effectively and lowered their prices instead of raising them and created an electronic means of getting their product to their customers (like red box has done) thereby reducing overhead costs, then they wouldn’t be in the bind they are in…

    I say keep the red box and keep teaming up with grocery stores, McDonalds, and wal-mart to house them….not block busters.

    The only contract I would take out with blockbusters, if I were red box, would be one to house and possibly fill the machines…I wouldn’t let blockbuster buy them, but you could team up under contract for blockbuster staff to fill them and even have one at blockbusters for customer convenience, then give blockbusters a kickback on % of sales….

    Don’t sell out your idea red box…
    my 3 cents

  12. Visitor [Join Now]
    Beth [visitor]

    NO Blockbuster shouldn’t touch Red Box. Maybe Red Box could do online renting of older movies and keep the Red Box ease of use for the newer movies.

    If a big company like them gets hold of this it may morph into something UGLY.

  13. Visitor [Join Now]
    Marty [visitor]

    Blockbuster won’t buy redbox, they’re currently offering $1 billion for circuit city.

  14. Visitor [Join Now]
    smilinjuju [visitor]

    Leave Redbox alone; it works great. Why turn something good over to a company that is doing so poorly?

  15. Visitor [Join Now]
    spikehollo [visitor]

    NO NO NO, LEAVE Red Box the way it is. If Blockbuster buys there is no competition out there and they will raise the prices to what they want them to be. It would be just like the utility companys. They would get greedy. Leave it as it is and let people enjoy movies at a reasonable price that pretty much everyone can AFFORD……

  16. Visitor [Join Now]
    NAOMA [visitor]

    leave the redbox alone. blockbuster will raise the prices.

  17. Visitor [Join Now]
    Joe [visitor]

    I don’t think it will be a reality because from what I underestand, Redbox pretty much breaks even on the video rental end. Their main income comes from leasing the kiosks to retail stores, who uses them as traffic generators. McDonald’s gets two visits for each rental transaction — one to rent the movie, another to return it. That’s TWO chances to sell you a Coke, Coffee, or even bring home dinner.

    Someone suggested putting Redbox’s in airports, hotels, etc. That wouldn’t fit their busiess model, as you are already going to be at the airport anyway — having a Redbox there doesn’t lure you to the airport vs. the train station or driving your own vehicle.

    Second, having a rental lounge staffed with employees would not work – employees could dispense videos from racks much more inexpensively than costly machines, so you’re back to a plain ol’ retail locaction.

    McDonald’s would be very unlikely–at least while there are Redbox’s inside of McDonald’s stores–to allow them to sell drinks, chips, etc, as that would compete with their food business, and if you still had the ability to rent/return anywhere, McDs would be losing traffic generation benefits, while redbox would be competing with them in food sales. McDonald’s at one time saw retailers that sold microwave ovens as competitors, as it was a means for people to get hot food fast, vs. running down the street to the golden arches.

    Don’t forget, that most of Redbox’s founders are former McDonald’s executives — While they owe no allegience to McDonald’s, there are undoubtedly many unwritten agreements that exist. Don’t forget that McDonald’s is MUCH larger a corporation than Redbox — they could crush Redbox if they wanted to. This is a company who has been known to buy real estate and open a location and sell dime hamburgers across the street from a licencee that had fallen from favor.

  18. Visitor [Join Now]
    Jay Z [visitor]

    I think that Blockbuster is a dinosaur. As such, it should go the way of dinosaurs. Part of my feeling stems from Blockbuster’s unfriendly treatment of Director’s in the way it arbitrarily edited movies without consent. But also it charges way too much for rentals when there are so many better options such as Redbox and Netflix.

    Now Blockbuster wants to buy Circuit City and Redbox? I think Redbox can do better and so can Circuit City. Perhaps they should get together and buy Blockbuster?

  19. Visitor [Join Now]
    m.t. kelly [visitor]

    if it ain’t broke, don’t fix it! i’m very pleased with red box. there are enough movies and the price is right. if blockbuster puts there fingers in the pie; forget about the price and convenience. no to blockbuster!

  20. Visitor [Join Now]
    j.a.tannenbaum [visitor]

    Do not sell to anyone
    the idea of having 2 redbox at a location is great.
    i would like to see more old clasics..gone with the wind,humphry bogart,jimmy cagney the 30 and 40 movies like tntetc.

    busy hotels would be great as everyone brings the family and on rainy days a movie would be fine
    again do not sell get more locations

  21. Visitor [Join Now]
    Brian [visitor]

    As Jay Z said:
    http://finance.comcast.net/www/news.html?x=http://absorigins.comcast.net/data/news/2008/04/14/937079.xml

    I actually think combining an electronics retailer and Circuit City might not be a bad move. Circuit City is in serious need of restructuring, as it really can’t compete with Best Buy.

    I really don’t think BBI will try and ruin the convenience of Redbox. Several years ago, BBI purchased an online DVD store based in Phoenix. They actually improved on that company’s offering and came up with a viable competitor to Netflix.

    At this point, BBI could buy DVDPlay, The New Release, or any of the other kiosk businesses OR buy Redbox OR start their own.

    I just get the feeling that BBI is trying to find a way to better leverage itself. They have a recognizable brand. I mean when you go rent movies the old line is “make it a Blockbuster night.”

    By getting into home electronics, Blockbuster can cross market DVD/Blu-Ray players for DVD rentals, consoles for game rentals, its STB for Movielink, portable players for Movielink, and televisions to bring it all together. It could put Blockbuster video stores directly into existing Circuit City stores — which would put it a step ahead of Best Buy. Or, it could put Blockbuster-branded kiosks into Circuit City. The Blockbuster stores could tap Circuit City’s inventory for its own stores. The possibilities are limitless.

  22. Visitor [Join Now]
    Brian [visitor]

    Oh, and a rental from BBI is cheaper than a rental from Comcast OnDemand … by about 50 cents. Plus, I get 9 (2+7) to 14 days (7+7) to return the movie. Simple as that. Plus, I like to use BBI to acquire hard to find films.

    On the surface Redbox is cheaper. $1/night, but I have had my latest rentals since last Tuesday. Guess what? I could have rented the movies for less at Blockbuster.

  23. Visitor [Join Now]
    sue [visitor]

    NO. i had more trouble with blockbuster and none with you. don’t ruin a good thing. PLEASE!

  24. Visitor [Join Now]
    Susan [visitor]

    Please!!!!!!! NO!!!!!!!!!!!!!!!!!!! All they would do is jack the price up. Don’t mess with this great thing!!!!!!!

  25. Visitor [Join Now]
    Dwayne [visitor]

    It would be a shame to mess up a good thing. There are a lot of people on limited budgets and REDBOX has been a welcome breath of fresh air. To sell to blockbuster would mean the end of a very good thing, because they would raise prices. The old saying “if it ain’t broke don’t fix it” surely applies here.

  26. Visitor [Join Now]
    Karen [visitor]

    Please do not sell out to Blockbuster! I’m barely able to make ends meet on a limited income and if it weren’t for Redbox, I wouldn’t be able to rent DVDs at all. With Redbox, I am able to rent a different movie each week for LESS than one single rental from Blockbuster. Four movies for less than the price of one…? It doesn’t take a rocket scientist to figure that out!

    As this country moves further into a recession, every penny counts. Redbox is and will be a godsend for those feeling the financial crunch. Blockbuster executives are well aware they may be out of a job once the recession in “full bloom” so trying to corner the market by having a monopoly is in “their” best interest, not the public’s.

    Do not sell out to the “big guys”! Keep Redbox the way it was intended: friendly, affordable and fun!

  27. Visitor [Join Now]
    Jason [visitor]

    I feel that they are both different places. Blockbuster has tons of copies of a movie while redbox has only one or two. Sometimes it is hard to get a new movie from redbox because they dont have it. I think it should remain the way it is but redbox should put more machines in even more places.

  28. Visitor [Join Now]
    mc [visitor]

    They need a sort of “Redbox On Demand” to satisfy the needs of people who want to watch old movies that only Netflix/Blockbuster currently carries. Concept is simple – Redbox institutes some “super” Redbox locations which will vend these older movies/have a much wider selection with more storage for all these movies. Movies would not be kept in cases, but would instead simply be stored by slot number and cased up on the fly when someone wants to rent. That way, you could keep many more movies in at any given time. I could see the flow going something like:

    #1: User goes onto Redbox website (or maybe kiosk-based selection) to select a movie they want to watch which isn’t currently in stock.

    #2: Redbox checks other semi-local Redbox locations to see if an existing hard copy could be shipped/brought in within a couple days.

    #3a: If no hard copy can be shipped, the machine connects to Redbox via a high-speed line, downloads the movie, and burns it internally. Labeling could be done either with an internal printer, or via something like LightScribe

    #3b: If it exists somewhere else, it’s flagged to be shipped out OR picked up and re-delivered with the next pickup

    #4: Movie is now in local Redbox, and customer receives email telling them it’s ready and being held for them. Customer then goes and picks up movie, watches it, and returns it. It’s then available in that Redbox for someone to select or to be relocated to another Redbox

    How awesome would that be?

  29. Visitor [Join Now]
    Evans [visitor]

    Lets call the brick and wall lounge “REDBUSTER”

  30. Member [Join Now]
    GadgetKen [gadgetken]

    Would not want Blockbuster to buy Redbox. Agree with comments they would just jack up prices and mess things up.
    Think the ideas of a Redbox lounge with multiple kiosks or a burn on demand machine for non-stocked titles would be good ideas, but both would require big capital outlays for new equipment or buildings and staff. Living in a town with both video stores going bankrupt within a couple of weeks of each other, I really appreciate the RedBox machines to get just the movies I want when I want them for a minimal rental charge or sometimes for free with a discount code.

  31. Member [Join Now]
    vk92008

    No buying of redbox by blockbusters. The media mass monopoly of buying and taking over is getting ridiculously out of hand. One of the viewers is correct in stating that Redbox is friendly affordable and fun. In times of recession this is the only affordable entertainment left.

  32. Visitor [Join Now]
    David [visitor]

    Blockbuster is a waste. Redbox should never let them buy out. 1st if it’s online renting netflix is better the movies come in about the same time when shipping. however blockbuster is only ships mon-fri netflix is mon- sat. Netflix on the 8 plan i am getting about 16 a week, on blockbuster i was on the 3 unlimited in store plan and still only getting like 5 a week. that’s something else if you have the instore you return it and the next bussiness day they will ship out. That’s not true. On the week end i would have all in and monday 1 would be shipped and tuesday 1 and wednesday 1. sometimes it was friday before they even sent out the one from the weekend. When calling and complianing all they said was sometimes after the weekend we get busy. But a whole week? come on. And if your talking about the in-store deals. On blockbusters unlimited 2 at a time 29.99 there’s one better hollywood video has 3 at a time for 14.99 just not the hot new releases or everything in the store 3 at a time for the same price as blockbuster 29.99. So again blockbuster has been beaten again. with blockbuster i got more cracked dvd in the mail then with netflix and with the store i have gotten more really bad scratched dvd then hollywood video. So in every part of the dvd business blockbuster is a waste of time, there is better and cheaper where ever you look. Even with the instore rewards program which is none like anyone i have found yet, theres still problems. The one free every month you have to have a transaction to get the free one, so buy something. Rent 5 get one well max 2 a month, there’s no trick there. And once you mon, tues, and wed rent one get one, no trick here. each rental costs 4.65 or around that it’s 4.50 plus tax where I go. Ok so if you use your 10 rentals on mon-wed you get 12 after paying for 5 plus the free one which you get after getting something you will pay 46.25 for 23 dvd’s which is 2.01 per disc. Still not as good as renting from redbox. So it a nutshell STAY AWAY FROM BLOCKBUSTER. There’s someone better no mater what you want to do.