As far as I can tell, Redbox targets a different consumer base from Netflix's. The majority of Redbox machines are placed outside of Safeways, Walgreens, Walmarts, 7-Elevens, and so forth. The sort of customer who rents DVDs from these machines is likely to be of lower socioeconomic status than your typical Netflix subscriber. He or she may not have a cable subscription, may not have high-speed internet access [1], and may deem Netflix's monthly fee to be too expensive. He or she could be a working-class parent, a college student on a tight budget, or maybe a reasonably affluent professional who, for one reason or another, doesn't consume enough entertainment to find Netflix worthwhile. On top of this base, you have a small proportion of ad hoc Redbox usage from people who happen to stop by, see a movie they can't get on Netflix, and check it out. And you have a very small proportion of film buffs who prefer the AV quality of physical media, like Blu-Ray.
Time will tell how long this strategy will work for Redbox. In their favor: their 36,000 kiosks are placed directly in the footpath of hundreds of millions of shoppers every week. (Walmart alone sees over 100M shoppers per week in the US, and 3,700 Walmart stores have Redbox kiosks). Working against them: broadband penetration, Netflix, Amazon, and the steady transition away from physical media.
[1] About a quarter of US households do not have high-speed broadband. That number will shrink over time, obviously, but perhaps not as quickly as we like to think it will.
It's actually more than a quarter depending how you define "high-speed broadband". A good number of households in the US are on <6mbps ADSL connections, which realistically aren't fast enough to stream video. Most statistics I've seen show streaming video penetration is closer to 40% of US households.
And you're right about adoption: there are a lot of people in the US who just don't care about the Internet. They will be increasingly less relevant as time goes on (this is already causing social angst at some levels) but they will persist. Usually you don't see 100% adoption of things like this until all the old people die and are replaced in the consumer pool by younger generations (aka generational cyclicality).
Redbox will be fine, at least for as long as physical media hangs on. It's a different use case - an impulse buy for the less technologically adept. As technology adoption of streaming video solutions reaches saturation though, I can see Redbox fading away.
It won't be a spectacular implosion like Blockbuster because they have the benefit of low capital overhead: those kiosks aren't that expensive and the DVDs themselves are basically free (AFAIK Redbox prints copies of them as-needed in exchange for a share of rental revenue to the copyright owners). So they can keep running them as long as the rental revenue covers the maintenance and re-stocking of the kiosks. The kiosks aren't even using valuable real-estate: if you got rid of a Redbox kiosk, I don't know there's anything else you could really put there that would generate a lot of money.
I'm not sure where you mean Redbox prints DVDs. They don't do it in the machine, as popular titles can be "sold out". It was over a week before I could find that last Captain America movie at my nearest Redbox.
No; they print them at their warehouses on an as-needed basis. DVDs get destroyed and lost easily, and they don't cost much to print. Individual machines will still run out if they're not restocked, though.
If it's true, they probably use a system similar to library ebook loans. They have a certain number of licences that can run out, even though there's no technical reason for it. I don't know why copyright owners would do it with Redbox since they get money for each loan.
Yeah, it will. I still use Redbox when they have what they want if I want it in Blu-Ray. iTunes' HD is pretty good, but it's no match for physical media even on my ancient 42" 720p plasma. But I don't know that grabbing a dollar from my wallet once a month is a sustainable business model.
Redbox is giving streaming a whirl, but frankly when I saw Verizon's name attached to it I didn't even bother.
