Redbox Automated Retail LLC began its quest to provide cheap and easily rented DVD’s in 2004 when it opened a couple dozen kiosk locations in Denver, Colorado. Owned and operated by McDonalds, Redbox was initially placed within fast food locations as a quick and cheap way to rent a DVD. Simply swipe your credit or debit card and select any movie you want for a buck. As long as that movie is returned within 24 hours no fees are added, however, each additional day you keep the DVD, you are charged $1. Each kiosk can hold 600 DVD’s, which means they have space for around 150 of the newest rentals, updated weekly.
In 2005, Coinstar decided they wanted to be the owners of Redbox and bought the company from McDonalds in two separate pieces. In 2005, Coinstar purchased 47% of the company and in 2009, purchased the remaining 53%. Having an intimate knowledge of kiosks, Coinstar seemed the perfect fit and the revenue reports reflect the decision.
In 2008, revenue doubled every quarter and with close to 22,000 Redbox kiosks in the US, Redbox is close to tripling the number of Blockbuster locations. The only thing that seems to be holding Redbox down is their lawsuit against Universal, 20th Century Fox and Warner Brothers, as these three studios refuse to allow new releases in Redbox locations. Twenty-eight days must pass from the DVD release date before movies from these three studios can be rented from a Redbox kiosk, making the demand for new releases unattainable.
To rent a Redbox DVD, all you have to do is run a quick search for your nearest kiosk and bring a credit or debit card with you. Cash is not accepted because there would be nothing preventing you from renting the DVD and never returning it. Once you have reached your kiosk, you can search through a few hundred of the newest DVD’s and after you have selected one, simply swipe your debit or credit card and the movie is dispensed. If you return your movie before 9pm the following day, your card is only charged $1. For every day you are late (Up to 25) you are charged an additional $1. Should you decide to never return the movie, you will only be charged the $25.00 and the movie is yours to keep.
As a recently added feature, Redbox now allows you reserve your movies online and then pick them up at the kiosk of your choice. One of the larger complaints was that movies were not available when you went to pick them up so reserving them online would take care of that problem. The Redbox website isn’t as involved as Blockbuster or Netflix, however it’s very clean, simple and easy to use.
The business model of Redbox is extremely simple and cost effective. Unlike Blockbuster and Netflix, there are no postage fees or constant packaging fees involved and maintaining a kiosk is extremely simple. As the concept continues to grow expect to see more kiosks at supermarkets and fast food restaurants, larger kiosks to hold thousands of DVD’s and a wider selection of movies.