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
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)?
BUYING MOVIES
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.
I think an algorithm at the kiosk would have to be very complicated. Blockbuster keeps track of how old a movie is and prices based on future potential revenue. If Redbox makes about $25 per movie as stated in part 1, they should sell for at least $25 on day one and lower it as the disc is rented more and more – probably difficult to track and manage.
Otherwise, if someone wanted a movie but it cost $20 on sale and they could rent it from Red Box on day one and keep it – only paying a cap of $10 – They would do that. Saving themselves $10 but costing Redbox money and taking a new release out of circulation for other renters.
Redbox – Downloads, Downloads, Downloads!!!!! That is the future of movies. Time to start $1 download rentals if you want to survive longer than a couple more years.
Jason
It doesn’t have to be complicated like that. Redbox’s goal is not to make a fixed amount of profit per disc, it’s to make a minimum amount of profit per disc. Thus, the simple answer is to continue the “$25 and you own it” until the disc reaches a certain age, like 60 days after release. Then, knock it down to $10 or $7 or whatever (since it’s used, it should be cheaper than a new disc) to get it cleared out of inventory. That way they don’t have to destroy discs (what a piece of crap, arm-twisting deal Sony made them agree to).
Come on already with the Blu-Ray discs Redbox!! As I do not buy DVDs, I have put off getting a Blu-Ray player until Redbox starts stocking them. As soon as I see them available, I’m headed to the nearest big box store to buy one. I would easily pay $1.50 and even $2 if I had too.
Now to get the studios to start producing all movies in Blu-Ray format, not just the big blockbusters.
DVD Movies in HD here I come!
I would be inclined to use redbox less if they take movies out to make room for games. It is sometimes difficult to find a decent movie now, how much more so when some slots are removed for games.
I have to completely agree with you. I also have a hard time finding a decent movie.
I agree with the logic above. Perhaps you could just keep your same system you currently have with a twist- move the older movies to the “Buy” section like you have been doing but label it instead “Rent Forever” or “Rent-to-Own”…whatever jargon is needed to make it happen. Then in the guidelines it would mention that we rent the movie for $1/day as usual and after 7 days, we can choose to keep it for free if we’d like without any penalty.
I am new to redbox and have only used it once so far. I intend to start using it more on the weekends. I didn’t know about it until a friend told me about it a week ago. I am signed up for the newsletter. In these economic times, this is a great way to rent movies. I love it! The prices you suggest are fine with me. The way this works is good because it is in my hands what cost I will pay. Your prices suggested are very reasonable to start out with. I say “go for it”. If someone doesn’t like it, they will let you know.
My biggest problem with RedBox is the poor selection. If they had every movie ever released, I’d be willing to pay $3-4 just for the convenience. As it is right now, it is a difficult balance – yes, poor selection but the price is low. Those two opposing factors do not really balance each other, i.e., you cannot accurately put price on (in)convenience. As for Blu-ray, I don’t own HD equipment yet, so I personally don’t care, but I think it is reasonable to charge another dollar for those rentals; that is, until Blu-ray becomes ubiquitous enough, then it’s back to $1.
I would have no problem paying $2 for a Blu ray disc, if it means a better selection. My local kiosk has some BD’s but it’s only about three or four movies, and I never know which ones because BD’s aren’t listed on the website.
As more video stores close…watch Redbox raise prices…for all rentals.
I can not wait for the video game addition to Redbox.
I’d be willing to pay up to $2 for Blu-Ray. $1.50 would be nicer, but if they need to make it two bucks to be profitable, it would be worth it to me.
I would only pay $1.25 for a rental for a blu ray.
Just charge $1.50 for every DVD and become more profitable and making expansion and growth quicker. I don’t think you should charge a surcharge just charge $1.50 for everything, at least for the first night.
Why should the price of DVD rentals increase to subsidize the cost of Blu-Ray titles? Did you pay (buy or rent) for VHS versions of movies at the same price point as DVDs? Different technologies lead to different price points.
As is often found on the intarwebs, here’s a car analogy. Say it’s time to get an oil-change. Should the cost of non-synthetic oil change increase from $30 to the same price as synthetic oil change $55 (reference: http://www.walmart.com/catalog/catalog.gsp?cat=495848 )? That’s an 80% increase.
RedBox should not consider raising prices until they get some decent movies. The selection has went south during the last year.
I would be willing to pay at MOST $1.50 for a Blu-ray. Right now, you can buy older but awesome Blu-ray discs from Amazon in the $9.99 to 14.99 range. If it were $2, I’d rather buy it new then sell it used later on eBay or Amazon.
Redbox is just so convenient that I’d prefer to support them so that Redboxes grow to hold more discs and so that the selection grows. I literally hate going to Blockbuster, but the fact that I can check a disc’s availability online (and even rent online) is just smart business in today’s age of immediacy.
I’m a videogame player, but would prefer not to take up videogame space in a Redbox (making less space for Blu-ray discs)… but that’s just me. I’d guess that videogames would be much more to rent than DVD and Blu-ray because a new videogame (retailing $59) on average costs almost double of a new Blu-ray costs (retail $39 but often on sale for $22-$25).
Give me more Blu-ray and I’ll be renting a lot more…
It would be great if they’d put the year the movie came out so we’d know just how old it is. Sometimes that would help me determine whether I wanted to rent it or not.
Great suggestion, Sweetie-Pie!
I just began collecting that information and it will soon be a part of the “Movies” section on this site.
Redbox – Downloads, Downloads, Downloads!!!!! That is the future of movies. Time to start $1 download rentals if you want to survive longer than a couple more years.
Jason
i think 1.50 is tops i would pay for a movie out of a redbox… really 1.25… i can very easy get coupons for RENT 1 movie get 1 free and a local video store will take these..
so i can rent 2 new releases for 3.00 (after tax) and i go past the store daily
so right now its
2 movies at redbox for 2.14 (after tax—-at 1.00 per rental) will do
2 movies at redbox for 2.69 (after tax—if 1.25 per rental) dont know
2 movies at redbox for 3.21) after tax if 1.50 per rental) not worth it..
and the local video stores have more copies
17 again all 4 close redbox was out of them by 10am today.. store had 40
i love you man was out of them store had 30
until they start to stock more new releases i wont pay more then a buck
Believe it or not (Believe it!), I don’t play games at least the kind you are referring to. I don’t recall if I’ve ever played a Play Station, Xbox or any other related contraption :-). To give you some perspective I’m a Baby Boomer (the latter end) and I think I left that scene with Pac Man and those alien space invaders.
I realized this may not even be comprehensible to some of the folks out here with the game industry being so huge and all but I just never developed an interest and still don’t have a fascination…
And thus my comment, I don’t have anything against those kind of games and think it’s cool that others have that option. However, I’d hope they would have separate kiosk for the games at least if it turns out that I’m competing for rental access time for the movies. Even so, I’m not too worried.
$2 for a Blu-Ray title seems right to me. Purchased new, they are no more than 2x the price of a DVD. Games are a bit trickier, because they generally cost about 4x a DVD. Maybe a “new release” price that’s $4/day and after a month the price drops to $2/day. I’m not sure if $2/day straight across would be worthwhile. To stick with a fixed price, $3/day would be the compromise.
I could definitely see renting games that I’m not sure I want to buy. There are many games that seem like they might be good to buy bug $55-$60 is a lot to gamble, so I end up not buying them. It would be worth $6-$8 to try one out. I would definitely also consider buying some used after their rental period runs out–especially those that were pretty good but not worth full price. For some games, it would be a big drawback not having the manual, though.
Blue ray is the VHS of the future. There is not that much difference in picture quality. The players are way to expensive for what I see on the screen. I will buy anything that gives me a gain in entertainment and Blue Ray is not one of them. Red Box needs games because of the poor movie selection.
“I won’t pay more than a dollar”…”I won’t pay more than a dollar unless the selection gets better…” What are you guys talking about?! These machines have practically NO OVERHEAD! The reason it costs $1 to rent a movie is because its fair to the consumer. If people want better selection, you have to figure in time, they’ll have to raise the price to keep up with supply/demand. The movies that are stocked in these machines don’t just magically appear in there. They have to pay for them, same as anyone else. Not to mention they have to pay people to come out and service the machines. They don’t fix themselves or put the new movies in by themselves. Seems to me, Redbox has the right business plan in mind and I can see them around for years to come. Company evolution is the nature of the beast people. Price included.
It’s been a pretty bad selection for about a month and a half, I rent maybe one movie out of desperation and then wish I didn’t waste my time.
I see universal titles in there so they do have a way to get them even with a lawsuit going on, so whats the problem?
If you go to amazon you can see a lot of titles available but RB just isn’t carrying them. Are they going broke?
I see a day soon that this business model won’t work, I can already watch a lot of TV shows online, and downloading a whole movie isn’t going to be that big of a deal real soon.
And lately I started watching old TV shows online instead of renting, because of the bad selection.
Sorry Redbox, it was nice while it lasted.
Redbox President was on CNBC a few minutes ago 08-12-09 About 8:50 AM Central time. I’ll check for a video tonight.
I spoke to a Redbox customer rep the other day and he said they would start with PS3 and XBOX games and they would be $2 for the first night and $2 each night after.
$2 dollars a night for game rentals is perfect. I hope they are careful how they approach the gaming industry. I do not want to see them in lawsuits with EA, Bungie, and etc. I am not sure about having seperate machines for games and movies. I know space is key. Especially when some people feel that the selection is limited as it is. I can see two choices. Either talk stores into have 2,3,or4 kiosks. Or make bigger machine with multiple checkout screens? Whichever is more cost effective.
http://www.cnbc.com/id/15840232?video=1212620340&play=1
Redbox CEO in CNBC interview on 8-12-09
“Redbox has added a section to their online system to track blu-ray rentals separately”
Where’s that? I don’t see anything.