There's no obvious solution to the tragedy of the commons for Redbox and scratched discs: people will probably lie about scratched discs to get a free return or new movie if you make it an automated system, but people will also scratch discs themselves and not report it.
Netflix has a lot of these problems solved just by virtue of their membership model: they can probably write off the scratched discs people return because of how secure their revenue stream is, and all you get from falsely reporting a scratched disc is the same disc mailed to you. (Maybe Redbox could just give you another copy of the same disc if you report it as scratched?)
On a related note, does anyone else think Redbox is angling for an acquisition by Netflix? It's almost obvious how to integrate the business models. They even have the same color!
Netflix has a lot of these problems solved just by virtue of their membership model: they can probably write off the scratched discs people return because of how secure their revenue stream is, and all you get from falsely reporting a scratched disc is the same disc mailed to you. (Maybe Redbox could just give you another copy of the same disc if you report it as scratched?)
On a related note, does anyone else think Redbox is angling for an acquisition by Netflix? It's almost obvious how to integrate the business models. They even have the same color!