
Movie Studios See a Threat in Growth of Redbox - peter123
http://www.nytimes.com/2009/09/07/business/media/07redbox.html
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physcab
“These machines are to the video industry what the Internet was to the music
business — disaster”

Hate to break it to you bud, but the Internet is not choosy about media types.
I promise you that when movie streaming becomes more practical, it will
destroy these bulky/expensive kiosks as well as other traditional store
chains. The time of DVD is slowly approaching its end.

~~~
electromagnetic
These machines were everywhere in France several years ago. I remember
commenting that I was exceptionally disturbed that the French had more
innovation in movie rentals than virtually anywhere else. I first noticed one
of these machines in a newly opened Wal-Mart this year, hadn't seen one before
in Canada.

It's taking so long in Canada to get these new rental means set up, there's
little wonder why the RIAA and MPAA are calling Canada a home for piracy. It's
the only way to get a movie without paying like $7 to Blockbuster for a half-
decent rental time. I've got the choice of constantly running to blockbuster
to rent and return a single movie that it's going to end up costing more in
gas than to rent the damn thing, because god knows blockbuster never heard of
a convenient location.

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michael_dorfman
Strangely written article. For example:

 _"The $1 price is not the main issue for the studios, although they do not
like that, either; it is the timing. New DVDs sell for about $25. Video-on-
demand services price them at about $5. Multiday rentals of new titles cost
$4.99 at Blockbuster.

Now there is a $1 option at the same time. That could put downward pressure on
the industry’s price structure."_

In other words, the $1 price _is_ the main issue.

~~~
ars
> In other words, the $1 price is the main issue.

Not so.

Movies are priced based on how early you get to see it. If you are willing to
wait, the price goes down.

Redbox prices them at $1 without making you wait [as much], which moves the
entire chain of time/price balances.

~~~
michael_dorfman
Let me ask you a question, then: if Redbox were pricing rentals at $10, would
the industry have a problem with them? No? How about $5? No?

It's the price.

~~~
pmorici
What about 1 dollar 6 months after it came out on video?

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davidw
I think there is probably a gold mine of ideas in things that failed 20/30
years ago. Sometimes things just aren't ready, even though they're really good
ideas.

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wenbert
I love this and wished that it was here in my country. A dollar is cheap even
from where I am at.

Here, you can buy pirated DVDs on the sidewalks for a dollar (USD). If there
were Redboxes here, people would automatically switch from buying pirated DVDs
to Redbox.

FYI, I am from the Philippines and pirated DVDs are so rampant here that they
sell it publicly outside schools, and in some malls...

~~~
vijayr
same is the case in India, where I am from. I can buy a pirated DVD for twenty
rupees (about 40 cents, at 50 rupees a dollar), and if I buy more (5-10) I can
get it even more cheaper.

guess what the studios did? they released DVDs, for sale, at about the same
price (25 rupees) - not the latest films, but many recent titles.

~~~
diehell
So does pricing the DVDs at about the same price help? Do people buy the legit
copies or still prefer the pirated DVDs?

~~~
wenbert
It is not only the pricing but the availability. I think, here (Philippines),
people buy pirated DVDs because the distribution is so wide-spread. So if you
sell cheap and legit copies and people have to go all the way out to buy, then
chances are that they won't.

With Redbox on the other hand, if it is available just around the corner or at
least in places with security guards (less likely to be vandalized, etc.),
then I'm pretty sure that the ones who sell illegal copies will go out of
business in weeks.

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patio11
I wonder if this would do well in Japan. You'd have to give the boxes cell
integration since credit card penetration isn't that high here, but other than
that it should work fantastically. Just put them within a block of the train
stations and you'll do so much business you'll have to figure out some way to
restock them for the first few weeks until you reach equilibrium.

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chris123
This is a fascinating article. It will be a Harvard Business School case
study. Even though it's not about online businesses, everyone should read it
top to bottom.

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thisisnotmyname
Brilliant PR hit - it both tells you about the company and makes you feel like
they're fighting for you.

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pyre
They call the 'Mom n Pop' model the opposite of revenue sharing, but many 'Mom
n Pop' stores do revenue sharing.

One thing that they fail to mention is that part of Red Box's success is due
to their expansion. It allows them to shift product that isn't renting well in
a particular area to new kiosks. This helps them to: a) pay less for new
product in new kiosks and b) not be forced to either trash the existing
product to replace it with other titles or let it sit there not earning back
any money for them. There are lots of examples of companies built on expansion
that ran out of steam... Krispy Kreme for example.

~~~
billswift
actually they referred to the "Mom and Pop" model as the opposite of vending
machines - the revenue sharing part was independent of the other.

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tlrobinson
Innocent question: is there anything stopping you from renting a whole bunch
of these and ripping them? (aside from your conscience, if that's an issue)

~~~
pyre
How is this even relevant though? You've been able to do the same thing with
Netflix, Blockbuster, etc for a long time now. The housemate of an ex-
supervisor had a Netflix account and would immediately rip the DVDs he got and
send them back (sometimes not even watching them), and this was from 2002 or
so.

~~~
zandorg
The dollar value of a rental is, for Lovefilm UK, about 90 cents. Because of
this low price, ripping a DVD is MUCH more effort than simply renting it
again.

~~~
joeyh
Not if you rip it in your car while sitting in front of the vending machine.
This avoids gas and time spent on returns, and worry about watching the video
before late fees pile up.

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baddox
The big industries are so short-sighted. They need to be worrying about
Netflix and online delivery.

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vijayr
_Analysts also see a threat to studios in Redbox’s practice of selling about
half of its DVDs into the used market_

I can sell used cars, used couch, used books but I can't sell used DVDs?

Music and movie industry has some of the craziest people in business

~~~
arohner
A DVD holds its value a lot more value than say, a used mattress.

For example, GameStop sells new xbox & PS3 games for $60, and used for $55.
When the consumer buys the used game, the publisher doesn't see any money.

Yes, they're still crazy in general, but this is a legitimate problem when you
want to continue selling stuff to customers.

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jacoblyles
This reminds me of a business idea that I had about 3 years ago that was
essentially a kiosk for downloading iTunes material. I thought it would be
particularly popular at airports.

Wi-fi in new iPod models will eventually make this idea obsolete.

