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Will Redbox Kill VOD (Video On Demand)?

And the love for Redbox by movie studios and providers continues…

Dawn C. Chmielewski with the LA Times wonders if the $1 rentals at Redbox are going to squeeze profits from online rentals.

A study from SNL Kagan finds that online video-on-demand services like Apple Inc.’s iTunes could suffer if consumers start to think $1 is the right price for a movie rental.

“It could just have earth-shattering consequences to these services hoping to reach people through the Internet,” said Wade Holden, the Kagan entertainment industry analyst who crunched the numbers.

Many of you have already said you would not use YouTube for rentals at a $3.99 pricepoint. At what pricepoint would you use an online service, assuming DVD quality streams?

Or, is the real problem with online rentals just that most people don’t have an internet-connected home theater, and don’t want to watch movies on their computer? Share your thoughts in the comments…

27 Responses to “Will Redbox Kill VOD (Video On Demand)?”

  1. Visitor [Join Now]
    joey [visitor]
    I work for VBG. To find out why this is important, click here.

    Said it before and I’ll scream it again. Redbox is destroying the entertainment industry. They are devaluing packaged media.

  2. Visitor [Join Now]
    TulsaMJ [visitor]

    Don’t have an Internet-connected home theater. I sometimes watch movies on the computer at work, but wouldn’t want to do it at home. That said, since Redbox only (in general) has the latest and greatest movies and online services can stock a virtually unlimited selection, I think there may well be a place for both.

  3. Visitor [Join Now]
    joey [visitor]
    I work for VBG. To find out why this is important, click here.

    They aren’t just going to destroy VOD……

    Blockbuster Inc. is planning to close as many as 40% of its stores over the next two years as the company continues to struggle against new competitors.

    The Dallas-based movie-rental company had previously planned to close 1,000 stores, but on Tuesday it raised that number to as many as 1,560 of its 3,750 retail outlets. Of those, up to 300 may be converted to outlets, and up to 300 are undergoing lease mitigation or termination efforts. It said the move would help boost profitability and save $26 million in working capital.

    Blockbuster has come under increasing pressure in recent years …

    • Member [Join Now]
      moviecrazy

      I’ve said it before and I’ll say “scream” it again, I hope Blockbuster does go out of business! They have always been the greediest jerks in the movie rental business and they deserve to go out of business for all the years they have been raping the public with their outrageous prices! They’ll get no sympathy from me that’s for sure! Again I say good riddance!

  4. Member [Join Now]
    alans613

    Joey, Blockbuster killed themselves by pricing themselves out of the market. They have no one to blame but themselves. Why pay $4.99 plus tax for a new release when I can get it for $1 at the Redbox? They got greedy years ago before RB existed and now someone else(Redbox)comes along and beats them at their own game. This isn’t even to mention how outrageous their catalogue movies were($1.99). Redbox IS NOT destroying the DVD business, but instead bringing people back to renting movies that stopped when BB started charging inflated prices for rentals. My two cents on VOD is that I see it continuing on alongside services such as how Netflix includes the option to watch the movie on your computer in addition to getting the physical DVD in the mail. The Netflix idea is the one that makes the most sense-Keep the people happy that have internet-connected home theaters AND keep the people that like the physical product happy at the same time without charging extra.

  5. Visitor [Join Now]
    Jaoson [visitor]

    I know if red box keeps putting up location that are convenient then yes I can see it killing the VOD.. I rented a VOD this weekend just because i didn’t want to drive the 7 miles to the nearest RB. If they had one at the new wal-greens or new McDonald’s that is about 2 miles from house, then I would of easily went to RB… So I would say its all still going to be about convenience…

  6. Member [Join Now]
    LABASAUTOMOTIVE [labasautomotive]

    why would i want to watch a movie on my computer with a small screen when i can watch it on my 70 inch tv???

    • Member [Join Now]
      Mark [rb123456789]

      There are a growing number of internet-connected TVs and boxes which connect to TVs. In 5 years, maybe sooner, there will be more people watching VOD on their TVs than on their computer. For example the Roku box Netflix introduced last year has been a much bigger success than they expected. And game consoles such as the Xbox 360 are already online for gaming and connected to the TV so it’s easy to watch movies on them without further hardware purchases.

  7. Visitor [Join Now]
    John Small [visitor]

    The studios make more than 50% of their income from DVDs. That amount is dropping rapidly as Redbox devalues the rental market. The end result will be less movies being made.

    Happy yet?

    • Member [Join Now]
      moviecrazy

      Yeah I’d be REALLY HAPPY if they would quit putting out all the TRASH they have been putting out for years! Maybe then they would have to be a little more picky and just put out GOOD movies!

      • Visitor [Join Now]
        joey [visitor]
        I work for VBG. To find out why this is important, click here.

        With less money it will be crappier movies. just like prime time tv now moving to Leno in primetime because it’s cheaper to produce then an hour drama.

        • Visitor [Join Now]
          Volcanicast [visitor]

          Yeah like that $30 million (extremely cheap for a movie) stinker that just came out, District 9. Or that other horrible movie Serenity. Wow. I hope they don’t make more trash like that and keep dumping 150-200 million into those amazingly great blockbusters like Transformers 2 and GI Joe.

          Redbox isn’t killing anything that’s not already dead.

          • Visitor [Join Now]
            rb [visitor]

            Hmnnn…My 20 year old nephew told me “District 9” was slammed by the critics BUT that he saw it and thought it was a really good movie! I almost went to see it at the theater BUT THEN blogger Jim blogged last month that it is coming to dvd in December so I figured I’d save my $10 and just wait to rent it on dvd. Now I don’t know what to do…..though I did see “Drag Me To Hell” at the theater and thought that was good (coming to dvd in October per blogger Jim).

          • Visitor [Join Now]
            laddyj2 [visitor]

            I agree with u its been dead for a long time now. and i feel RB is doing it right, these other places are just jealous cause the jacked up by hicking there prices. RB is playing the game right, not to mention the fact that especially now with the way the gov. is goin not a lot of people have money to be spending $5 or more to rent a movie. For that kind of money if RB didn’t have something i wanted to see that day i would rather go to Walmart and by a $5 movie and have it to keep, then rent from BB and have it for 1 to 4 days.

        • Member [Join Now]
          moviecrazy

          I agree with you on Leno, I used to be a big fan and watched him every night, but now the new show is just a rehash of his old show, just an hour and a half earlier. But as far as crappier movies go I really don’t see how they could get much worse! I’m saying maybe less revenue will force the movie studios to be more careful of the movies they put out and make them concentrate on putting out GOOD movies that the public will pay to see and therefore make them money!

    • Visitor [Join Now]
      pinpoint [visitor]

      Thats not the end result John Small. Did it ever occur to anyone that maybe all the costs including the money they give to actors and directors, etc (and hence, the dvd you buy) has been OVERVALUED up to now? I listened to an interview with Dustin Hoffman the other day and he was asked where all the good actors are nowadays and he replied that all Hollywood wants now is the latest pretty face to plop into their big budget movie to give them the best shot at getting their money back…so their are good movies out there that people bypass beacuse there is no commercial on tv for it. These are the same movies I see people here saying are CRAP and B MOVIES. It confirmed something I always thought. We, the consumer, have always essentially been the “bailout” for Hollywood’s failures. When they rehash Matthew McConaughy in some piece of crap romantic comedy that stinks up the box office, WE are expected to pay thru our noses to either own it or rent it for $5 so they can cover their butts. If we’re telling someone like redbox that THEY should get movies late since they charge so little its because the consumer should be getting something “less” for paying less. I wonder how Hollywood would like it if they were expected to only charge $5 instead of $12 at the box office when the movie is some piece of crap like I LOVE YOU BETH COOPER.
      Its all about business and redbox seems to have made the best move right now…and I am sure it will make mistakes and things will change again. But now Hollywood is looking for a bailout for being bad at their jobs….I dont think any of you renters would find someone bailing you out and saving your cushy job if you were bad it it either.

      So as for redbox killing packaged media…thats crap. Someone a lot smarter than the guys in place now will figure out a way to make things work WITH redbox instead of fighting a losing battle.

  8. Visitor [Join Now]
    jason [visitor]

    What would I pay for an online video download rental? $1 and no more — online rental does not include any extra video such as behind the scene or director commentary, AND there is little overhead and NO inventory. The $1 is almost entirely profit. Internet ready TV’s are coming! If i were redbox, i would be working on an application that would integrate into those tv’s or labtops much like the Hulu desktop. Just my two cents!
    JASON

  9. Visitor [Join Now]
    tuna [visitor]

    last week i rented a movie from Hollywood video for $5 for 5 days and it was a new release the only way hollywood video would make money if i bring back the movie early and they can rent it out again as i dont keep movies for 5 days to watch the studios are using redbox as a whipping boy for them losing money on dvd rentals

  10. Visitor [Join Now]
    Carson [visitor]

    I have an internet connected home theater, and I watch all my tv through it free! But for movies, why would I spend money on VOD when I can just get free movies through RedBox, I can’t even go through my free codes fast enough!!
    But there are always people that want to have the ‘latest’ technology (VOD) and will pay top dollar for it, those morons keep this economy going!!! But as for the movie industry? they can lick balls, it would be nice if they made less movies, then I wouldn’t be obliged to watch them… =)

  11. Visitor [Join Now]
    todd [visitor]
    I work for VBG. To find out why this is important, click here.

    With distribution deals between Redbox and Warner Home Video and 20th Century Fox Home Entertainment set to end next month, Pali Research analyst Richard Greenfield questions future new release copy depth for the $1-per-day movie rental kiosk market leader.

    Universal Studios Home Entertainment stopped distributing new releases directly to Redbox in 2008, prompting the first of three class action lawsuits by the Coinstar subsidiary.

    Redbox, in the interim, has acquired Universal titles at traditional retail channels, including Wal-Mart and Target, resulting in lower copy depth of new releases at kiosks (24 to 48 hours after street date) and at reduced margins.

    Redbox does have exclusive distribution deals with Sony Pictures Home Entertainment, Paramount Home Entertainment and Lionsgate, for which it will pay the studios $1.1 billion collectively over the next five years.

    Citing rental data from Home Media Magazine and other sources, Greenfield found that the top titles rented weekly at Redbox differed regularly from industry results — underscoring the impact of Universal’s embargo.

    “What will happen when Redbox has to acquire nearly 60% of studio content [through third party retail channels]?” Greenfield wrote in a note.

    From May 31 through Sept. 6, Greenfield found that only for the week of Aug. 2 did Redbox and the home entertainment industry have identical rental results.

    The analyst said he wasn’t sure what, if any, impact the dearth of Universal titles at Redbox kiosks was having at sellthrough.

    Greenfield said he doubted consumers have seen a difference despite Redbox’s problems with Universal, but he said that scenario could change when the top box office titles from Warner, Universal and Fox are released later this year.

    “When Harry Potter, Hangover, Ice Age etc. … all become very hard to find, we suspect they may start to view Redbox’s content offering differently,” Greenfield said. “While Redbox likely hopes consumers are satisfied with the next-best title, we wonder if they will run into the problems Blockbuster did years ago when it needed a shift to revenue-sharing to prevent always [having] out-of-stock ‘hot’ titles.”

  12. Visitor [Join Now]
    Cloke [visitor]

    Wow, people really think that redbox will destroy VOD? Ha. Perhaps redbox will not be affected by VOD, as a big portion of redbox customers are really behind the times. Most of them don’t even know what a web browser is…

    VOD will remain strong as ever. How do companies like Hulu operate based on ad generated content alone? They somehow manage to survive, and are able to run prime time and Superbowl commercials at the same time. Of course we’ll see if this free content strategy continues, but I don’t think VOD is going anywhere.

    Personally I hope VOD kills redbox, as in my opinion they are not at all aligned to provide competent digital distribution. They say they are, but I think that’s just fluff talk. I myself would much rather hook up my HDMI compatible laptop to my HDTV and stream content. Or with set-top technologies coming equipped with streaming software such as Netflix, this will help further expand VOD’s dominance over physical media distribution. I for one am thoroughly enjoying my TVersity and Xbox 360 set up, and although I can rent multiple free redbox DVDs a day, why bother?

    • Member [Join Now]
      chi

      “Perhaps redbox will not be affected by VOD, as a big portion of redbox customers are really behind the times. Most of them don’t even know what a web browser is… ”

      Wow, that one sentence alone shows what a jerk you are!

      • Visitor [Join Now]
        Carson [visitor]

        But cloke does have a point, I’m always surprised at how many RedBox users don’t know that you can search for movies and reserve online before going to the actual machine.
        I see people not finding a movie they want on a Saturday night, saying it is the 3rd redbox that they’ve been to, and then asking where another redbox is, and then when I tell them that they can search online for a movie they want, they act like that is not at all convenient… “You mean I have to ‘log on to the internet’ to reserve a movie?!?”

    • Visitor [Join Now]
      Carson [visitor]

      Hulu is talking about charging a fee soon, or at least charging for their subscription services, which really blows, I only use them because they are free…

  13. Visitor [Join Now]
    Tim [visitor]

    Why would someone watch a movie on their computer when you have access to accessories to connect your computer to your tv? Why is it so hard to do?
    Read about how about doing it if you do not have the brains to figure it out by yourself.