This is part 2 of a 3 part series on where Redbox has been and where it is going. Read part 1 here.
In part 1 of this series, I discussed some of the recent developments at Redbox and what they mean to you. Redbox has been around since 2004, but didn’t really become known until 2005. I launched Inside Redbox is December of 2005, and boy has Redbox come a long way since then.
So, in this installment I want to discuss some of the things coming in the near future to Redbox. Some of it will be things you may have heard before, and other parts will be true “inside” information that you will not likely know about unless you are close to Redbox.
I want to take this opportunity to reiterate that Inside Redbox is in no way affiliated with Redbox. I just keep my ears and eyes open, and enjoy sharing this information with you. So, lets get right to it…
Blu-ray rentals have been available for the past little while at limited locations, but definitely not in a wide release. This is about to change in the near future, barring any crazy developments related to the situations with Universal and Fox.
Redbox has added a section to their online system to track blu-ray rentals separately, which means we will soon see online renting and tracking for these hi-def discs. In addition, Redbox is beginning to test higher price points for these discs, marking the first departure for Redbox from the $1 price point.
What price point will we see? It will all depend on at what point Redbox can stay profitable and have customers rent enough discs. My guess? $1.50 per night. But, perhaps even as high as $2 for the first night, and then a lesser amount for additional nights. What do you think a good price point would be to get you to rent blu-ray?
VIDEO GAME RENTALS
In addition to Blu-ray, Redbox has mentioned its intention to get into video game rentals. This will include adding video game discs to current kiosks, as well as having separate kiosks just for game rentals. Redbox even hired a new executive awhile back just to manage the video game portion of the business, so they will be entering this market in a big way. And, in the last few days, I spotted a handful of video game titles directly in their system, and a few (LittleBigPlanet, GI Joe and a UFC title) even slipped onto their website for a short time.
What kind of games are they going to rent?
So far, the discs I have seen in their system included PS2, PS3 and Xbox360 titles. Of course, Wii titles are also a likely addition. Not likely to be included: PC games.
What is the price going to be?
Again, this is anyone’s guess. I believe we will see a very competitive price point, due to the fact that companies like Blockbuster and Hollywood Video already rent discs at prices equivalent to about $1.50 per day, and in many cases less when the Blockbuster “late fee” system is used to its highest advantage.
The daily rental price model could be a very big advantage to Redbox here. If they simply charge $1.50-$2.00 for the first day, that could mean big savings for customers who just want to try a game to see if they like it. If they don’t, they could return it the next day and only be out a small amount, instead of the $8-10 they would be out if the rental came from Blockbuster or Hollywood video.
Redbox could also employ a hybrid pricing model, where perhaps they would charge $1.50-2.00 for the first few days (say 3), and then drop the price to the usual $1 per night. This could keep long-term and short-term renters both very happy.
What do you think? How should Redbox price this, and what would make you happy (but still be reasonable)?
Redbox has been running its “$7 (or $6) Keepers” program for a few years now, so this is nothing new. But, the ability to find and buy these discs online will indeed be new. And this is exactly where some recent changes to the Redbox system are leading, allowing you to buy discs directly online and pick them up at your local redbox kiosk, just like the reserve feature now works for renting.
Some things that could hinder this movement:
Not all stores allow Redbox to sell DVDs in their kiosk. Stores like Wal-mart and other retailers that may sell DVDs as part of their business don’t want Redbox cutting into their sales. However, places like McDonald’s and gas stations don’t mind at all, and are a good source for cheap, used DVDs from Redbox.
Deals with studios. The deal that Redbox recently made with Sony do not allow the resale of DVDs by Redbox. In fact, the discs must be destroyed after they are removed from the kiosk. If more deals like this are made, it may even make more sense for Redbox to pull out of the resale business completely, as Netflix has recently done.
I do have an idea for Redbox here, though, as it relates to this. That is to make it more economical for a renter to never return a disc after they rent it. Right now, for example, Redbox will charge users the usual $1 per day until 25 days have passed, and then the disc becomes the property of the renter at the (slightly) high cost of $25 + tax.
What it Redbox was to change the amount of days it would charge for discs as they got older? For example, if you were renting a movie that was 30-60 days old or so, Redbox would only charge you for 10 days and then the disc would be yours. Blockbuster actually does exactly this with many of their movies and video games, printing on your receipt exactly how much it will cost to “own” the disc.
What do you think? Could this work for Redbox, or is this against the rules of the “copy-depth” deals Redbox is making with studios?
That is it for part 2 of this 3 part series. Feel free to share any of your thoughts, feelings and answers to questions asked throughout the article in the comments below.
Don’t forget to look out for part 3, which will let out a big secret about what is coming to Redbox a little bit further down the road. If you don’t already subscribe to the “Insider Updates” newsletter, do it right now (form on right side of the page) and you will be notified as soon as part 3 is ready.