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Tuesday, June 23, 2009

Netflix vs. Redbox

Interesting article in yesterday's New York Times about the growing competition between Netflix and Redbox, the DVD-rental kiosk business that is owned by Coinstar.

Amazing facts: a Redbox kiosk stocks 200 titles (mostly new releases). They have more than 15,400 kiosks operating today, and are adding one new kiosk every hour. The president of Redbox is an ex-Netflix executive, Mitch Lowe.

I see Redbox's kiosks threatening local video stores more than Netflix...given that you still have to pay a $1 fee for every day the movie is late... and given that renting from Redbox, like the video store, requires a trip in the car (rather than just a trip to the mailbox.) Netflix is auto-magic; Redbox requires effort. (Not to mention Netflix's movie streaming service, which is pretty solid -- a good way to either sample movies you might want to watch on DVD, or watch entire movies if you don't care that much about resolution.)

But I'm surprised by some of the titles Redbox carries, like 'Waltz with Bashir,' 'W,' 'Religulous,' and 'Miss Pettigrew Lives for a Day.' You can also reserve a DVD on the Web site, to make sure it's still available at your closest kiosk when you arrive.

Have you tried Redbox yet? Do you use it regularly? What's the experience like?

(Update: The Wall Street Journal just posted a great story about Netflix's strategy that references Redbox.)

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12 Comments:

  • I'm actually not that surprised. With the exception of a handful of specialty/indie/art titles Redbox serves the bloated head of the Long Tail of movie rentals. They're not going to threaten Netflix's role in serving the narrow end of that tail, the hard to find films that people add to their queue long in advance. Instead it's going to be the blockbusters that people add because they see it in the "New This Week" promotional slot. It's capturing the "spur of the moment" shopping.

    I'd also be willing to bet that for every two rentals Redbox takes from Netflix it sends one to them by virtue of the movie being out of that stock at that location and people going home to add it to their queue.

    By Blogger Chris Thilk, at 11:43 AM  

  • they're both good services now but Netflix who are putting capital into R&D for emerging delivery technologies will eventually win in the end. It's funny because very recently one of the investment banks that is involved with Netflix was trying to get Reed and the gang to focus on optical media as it made the most money "right now".

    I say hats off to netflix for their continued and calculated risks they take on bettering the distribution business.

    dave

    By Blogger David Geertz, at 11:56 AM  

  • Redbox is great for last-minute rentals, and I see the short-term competition, but I tend to agree with David that Netflix's future is in streaming.

    http://www.jinni.com

    By Blogger Phoebe, at 3:20 AM  

  • The one where I live is at the local market. More impulse buying for$1. how can you go wrong? Since we at at the store or drive by everyday no big thing.
    Red Box will not put anyone out of business, but Blockbuster is crying

    By Blogger Wayne Clingman, at 11:51 AM  

  • While Redbox's near term threat may be more of an issue for video stores or Blockbuster, it still represents a dangerous competitor to Netflix. Because of the issues with securing rights to content, it will take a hybrid DVD/download company in order to move forward. Whether you look at the tepid response to Amazon, Cinema Now or Apple, it's clear that without the full selection of DVD rentals, consumers are reluctant to adopt downloads.

    Since Netflix's position is so unique, it's given them a big lead in this race and while they do have competition with Blockbuster, there are only a limited number of firms who can replicate what they do. With Redbox continuing to grow larger and larger, they will eventually need to address digitization and by leveraging their DVD product, they could be the first healthy company to really give Netflix a run for their money. It could take a few years for this to happen, but it's a bigger threat to Netflix, than people give them credit for.

    By Blogger Davis Freeberg, at 2:24 PM  

  • Redbox is great for the impulsive movie watcher! On the way up to my family's cabin a couple months ago we stopped by a McDonald's in the middle of nowhere and there was a Redbox - it was great! You just can't forget to return the movie on the way back :).

    However, that is about the extent to which I find value in Redbox's service. I am a very happy Netflix customer. While Redbox improves on the brick & mortar rental process, Netflix changes the process completely. Netflix also has a far more diversified business model that allows them broaden distribution and develop new revenue streams while propelling subscriber growth.

    By Blogger John Dugan, at 1:15 PM  

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  • By Blogger wu, at 7:27 AM  

  • Redbox is perfect for people who don't rent very often and don't want to pay $5 a month or $4 a trip to Blockbuster.

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