Redbox is a DVD/Blu-Ray rental company which utilizes kiosk machines placed in convenient, high-traffic locations. The first Redbox kiosk was opened by McDonald’s in 2002. Redbox was later purchased by Coinstar, Inc. , and over the years, Redbox has rented over one billion movies and has grown to more than 27,000 locations in restaurants, grocery stores, pharmacies and convenience stores nationwide. Redbox proves to be a very unique way to rent DVD’s and by the nature of Redbox’s rental process, most businesses would benefit from the increased traffic generated by having a kiosk machine at their location.
This type of relationship proves to be a win-win situation for both Redbox and the businesses which are housing the kiosk machine. Redbox’s primary target market proves to be the busy, I don’t have time to visit Blockbuster or login to Netflix type of consumer. There kiosk machines are located in common shopping locations which lend themselves to the “lazy” consumer.
Furthermore, Redbox is also targeting the casual movie watcher who isn’t necessarily intending on renting a movie.
In a way Redbox has turned renting movies into an impulse item. As a result, Redbox provides consumers with a service never seen before and has emerged as one of the largest DVD rental chains in the world. Redbox’s marketing mix is simple, unique, and clever. They have successfully turned a shopping item into a convenience item. Times have changed since the first movie rental store, Magnetic Video, was opened during 1977 in Los Angeles, California.
During that time home personal computers were barely seen and the internet was nowhere on the horizon, so movie rental stores with good customer service provided the consumer with knowledge about the movies they were interested in. However, in today’s fast moving, information crazed world, consumers can obtain better information on the fly with there Blackberry, iPhone, or any other internet ready handheld device. Obviously Redbox recognized that consumers generally already know what movies they want to watch and they do not need to visit a movie rental location to get these hot new DVD releases.
Not only does Redbox provide a unique service, they provide it at a low cost at convenient locations. Most movie rental stores charge $4-5 to rent a new release for approximately 3 days, whereas Redbox provides a similar service for $1. 29 per night. This is extremely cheap considering most consumers watch their movie rental the same day they rent it. Furthermore, Redbox gets this low cost movie rental product to the consumer through a channel of distribution historically associated with snack foods and soda.
By providing movie rentals through vending machines called kiosks located at shopping locations where consumers already go to shop, they have eliminated much of the costs associated with conventional movie rental stores and the need for consumers to make an additional stop just to rent a movie. Since Redbox’s inception, it has experienced enormous growth and profit, but they will need to evolve in order to get ahead of the curve. Although Redbox appears to have established themselves as a formidable competitor to Netflix and Blockbuster, they are facing a gruesome reality.
The take-home movie rental business is rapidly losing ground to online streaming video directly to consumers’ homes via the internet. Netflix has already been providing this service for quite some time and both Redbox and Blockbuster are feeling the pressure. Blockbuster, Inc. has already declared bankruptcy and very well may close conventional brick and mortar locations entirely. Redbox will need to change their marketing strategy significantly in order to stay competitive. The industry is changing and Redbox will need to seriously consider providing a viable online streaming video service which can rival Netflix.
I propose Redbox should cease all efforts in providing any more kiosk machines so they may focus most of their resources to providing the consumers with what they want, online streaming video. Netflix has already got a head start, but even they will not be an exclusive online service for a few more years. So, Redbox must follow the money if they plan to be in business in the next five years. On the other hand, Redbox also has a golden opportunity to gain a large market share in the gaming industry. Redbox needs to become the first and only company to offer video game rentals through vending machines.
Redbox is poised to achieve this goal with little to no effort and with their only possible competitor in this area being Blockbuster, they are sure to make huge profits from offering this service. Redbox already has the distribution channels in place; all they need to do is make a smooth transition from offering DVD’s in the kiosks to offering games. This should be a tiered transition which coincides with their streaming video efforts. In other words, Redbox cannot simply remove DVD’s from the kiosks and replace them with games immediately.
As Redbox begins to provide consumers with a reliable, concrete streaming video service at a competitive price, they can slowly remove DVD’s from kiosks and replace them with the hottest new video games on the market. In conclusion, Redbox is currently providing a service which is in its decline stage and they need to consider changing their product mix in order to get ahead of the curve. They can accomplish this by providing consumers with an online streaming video service and becoming a pioneer in the gaming industry. Get Your Game on with Redbox!