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If Redbox is This Bad, It’s Got to Be Good

I love Redbox.

It’s the most convenient way to watch a movie, on a whim, without getting into any long-term contracts or recurring fees and at a great price. They even have an iPhone app for reserving movies before you go to pick them up.

Unfortunately, the movie studios hate Redbox. It’s too cheap. We don’t make any money off of it. It makes DVDs worth less.

Just how bad is Redbox for the movie studios? It’s going to destroy the entertainment industry, says a new report (via NewTeeVee).

This loss in revenue will lead to a slowdown in movie production, crops will wilt, the earth will turn to salt, etc. The study says that Redbox is disrupting the home video industry in four ways:

  • DVD sales are cannibalized
  • Customers will want lower rental prices from other outlets
  • The perceived value of movies will be harmed
  • Redbox’s sale of discs into the aftermarket conflicts with other retail channels

Redbox’s kiosks also will send shock waves throughout the industry and could lead to the loss of 9,280 jobs, $35.4 million in contributions to health and welfare funds being cut, and a reduction of $30 million in tax revenue.

What a load of bullshit. I’m not even going to explain why these accusations are totally off-base. The real story here is that, time and time again, the entertainment industry is too busy fighting the last fight and looking for a scapegoat for its problems.

There’s a reason why Redbox is so popular — it’s cheap and convenient. But it’s a business model that will only last for so long. Look at Netflix; they know that DVDs will become the minority and Internet streaming will become the norm.

Netflix is looking to the future. Redbox, I’m sure, is too. So why are the movie studios always stuck in the past?

2 Comments

  1. Ben

    The studios problems with Redbox are crazy and while I understand why they’d rather Redbox charge $3 instead of $1, I don’t believe the studios have a leg to stand on.

    All that being said I get sick of people using the “why are the movie studios always stuck in the past?” line. The reason is very simple and it is the same reason most Americans sell their old house before buying a new one and find a new job before quiting their existing one. It is a smart financial decision.

    Until the digital downloads model proves it is economically viable, why would the studios give up on physical discs?

  2. junger (Author)

    @Ben – good comment. But it seems smarter to spend time developing an economically viable way to make money on emerging technologies than to hinder people’s access to your product.

    I look at Redbox like I do EZ-Pass. It’s way more convenient and cheaper for both users and companies to have an automated system than the overhead of the way things used to be.

    Toll booths provide EZ-Pass because it’s cheaper, gets more cars through and has less associated costs. Redbox does the same. That’s why there are competitors to it popping up all the time.

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