March 3rd, 2010Movies for Cheap: Is Redbox the New Netflix?
Renting a DVD from a Redbox kiosk is as easy as getting a Snickers from a vending machine and costs about the same too. The $1-a-night DVDs can be returned to any of Redbox’s 22,400 kiosks, which are located in supermarkets, McDonald’s, pharmacies and strip-mall parking lots — pretty much anywhere consumers are already headed. My local supermarket has a Redbox kiosk in each entryway, and I sometimes bribe my kids to behave while shopping by promising them we’ll rent Cloudy with a Chance of Meatballs on our way out. Should we fail to return it, the most we’ll be charged is $25 — or about the cost of a new DVD.
Redbox is one of the Great Recession’s great success stories. In 2009 it added one new location per hour and made twice as much in revenue — $774 million — as it did in 2008. But studio execs aren’t happy that many consumers who used to amass big video collections are now more likely to be entertained on the cheap by Redbox, on-demand cable services that usually charge $5 or $6 for new releases or Netflix, which costs $9 per month for unlimited DVD exchanges.
On Feb. 16, Warner Bros. (which is owned by TIME’s parent company, Time Warner) cut a deal that makes it easier and cheaper for Redbox to acquire its DVDs; in exchange, Redbox agreed not to rent the studio’s movies until 28 days after their DVD release. In those first four weeks, 90% of a typical DVD’s sales occur. Netflix has agreed to the same waiting period, and other studios are expected to make similar deals.
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