Redbox makes a splash

I wrote a set of articles about cable/satellite alternatives that explored online and mail order alternatives. Recently though another competitor has entered the space in Redbox. Redbox has a different business model. Put a video dispensing machine at a retail location where people (potential customers) will be anyways. This might be a grocery store or a drug store. Stock the machine with collection of DVD movies and offer them at a price that would attract a sale or create an impulse buy (rental).

The LinkedIn profile for Redbox states they have over 500 DVDs available in each machine. Each selection is offered at $1 per day plus tax.  Selection are updated each Tuesday.

Here are some other stats from a NY Times article:

  • Today there are over 15,400 machines in network
  • A new machine is being installed at the rate of one per hour
  • Sales exceeded $150 million last quarter

My family has used Redbox three times in the past month. The transactions were all very smooth and the price was certainly right. There is no doubt that we’ll continue to use this service.

Redbox appears to be hitting the market at the right time with a low priced product when many people are cutting expenses.  Their price point isn’t even in the same ballpark with competitors like Netflix and Blockbuster.  So keep an eye to see how Netflix and Blockbuster respond as Rebox carves out share of the overall rental market. Will the two giants respond by lowering their price points on certain rentals to appeal to the price sensitive customer? Or will they look to differentiate based on service and selection to justify their higher price point?

What’s your take? Have you used Redbox? How much market share do you think they can gain?

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