Redbox, video and economics
Dawn C. Chmielewski of the LA Times today has an article about Redbox, the company that operates automated kiosks renting DVDs for a dollar a day. The company was originally part of McDonald’s, but has since been bought out by Coinstar — a great fit, since they already have a business running change kiosks in supermarkets.
Dave Poland thinks the story marks The Day The Movies Died. As usual, he makes some good points. But he also over-reacts:
I keep hoping that the sky isn’t actually falling… that it will not all be television… that there is an answer in technologies that I think are overhyped (though sometimes excellent), like 3D or IMAX… but this $1 rental kiosk and the industry’s failure to stop it is exactly the kind of thing that makes me despair.
I grew up in Boulder, Colorado. I had $1 video rentals at my grocery store (King Soopers) since the late 1980s. Sure, you can adjust for inflation,1 but one dollar is mostly a psychological price point. Videocassettes and DVDs have been available at that figure for a long time.
I’m not dismissing Redbox. I’ve always admired Coinstar, and these kiosks seem to have the potential to finish off the remaining brick-and-mortar video rental stores like Blockbuster.2 No kiosk is going to have the depth of Netflix, the expertise of a genre video store, or the immediacy of pay-per-view. But for the casual video consumer who doesn’t want to register for Netflix, it’s slightly more convenient and attractively priced.
My friend Jeff has made his fortune finding money in dying industries. He sold clip art packs for home publishing programs and CD-ROM backups of programs people had already downloaded. He kept his prices low and his costs even lower. Redbox is doing the same thing. It won’t kill DVD. In fact, it may keep it viable a few years longer as we transition to digital various forms of intangible digital delivery.
I don’t think Redbox is going to convert DVD buyers into DVD renters. But then, I don’t really understand why people buy DVDs at all, except for kids’ movies that get played 200 times.
Shiny discs are becoming less important and less profitable. That’s changing the industry, but I don’t see Redbox as a specific harbinger of doom.
- Adjusted for inflation, $1 is $1.65. ↩
- That said, Blockbuster has been the subject of obituaries for at least a decade. ↩
Articles
March 30th, 2009 at 3:50 pm
Five words: A Video Store Named Desire
March 30th, 2009 at 4:49 pm
Ah, one of my pet peeves.
We’re not going to transition to “digital”.
DVD’s (and CD’s) are already digital.
We’ll be transitioning to downloads, a transition from one digital format to another digital format.
Sorry to be pedantic, but that one always bugs me.
March 30th, 2009 at 5:33 pm
I buy duhvuhduhs because they’re tangible.
March 30th, 2009 at 5:49 pm
@mike:
I’ll amend the post — but I think you’ll be suffering with your pet peeve for a long time.
Sure, DVDs store their information in digital format, but because they’re tangible, physical media, they’re not what people mean when they talk about a track from iTunes or a video on Hulu.
“Downloads” is a problematic term, because it implies ownership and/or permanency, which isn’t the case for online rentals or VOD.
March 30th, 2009 at 6:12 pm
On the contrary, to me, “downloads” implies nothing about ownership — indeed, look at the RIAA’s (et al.) efforts at making the word synonymous with theft in popular parlance.
And with tongue in cheek, one could argue that physical media are actually “more digital” than downloads, since you can tangibly hold them with fingers! ;p
March 30th, 2009 at 6:24 pm
Sadly, the King Soopers in Boulder stopped renting movies a couple of years back. It was very convenient to grab a movie and groceries at the same time. (If I ever ate at McDonalds, I would probably try out the Redbox service for the same reason.)
March 30th, 2009 at 6:55 pm
Red Box IS a very big deal. My sister lives in S. Florida and has never been a big DVD renter (or buyer). But since discovering Red Box (at every Walmart), she’s never rented so much. She gets all the newly-released titles on the day they come out for just a buck a day.
Like you, I never buy DVDs, but I sure as hell wouldn’t go back to Blockbuster, or any other renter, if I have a Red Box in my area.
It’s got to cut into sales, just like Netflix has. And that’s why the studios are afraid…very afraid.
March 30th, 2009 at 7:09 pm
Obligatory Onion link:
“Historic ‘Blockbuster’ Store Offers Glimpse of How Movies Were Rented in the Past”
Just click on my name.
March 30th, 2009 at 8:12 pm
John, I’m confused — “I don’t really understand why people buy DVDs”???
Because we love movies? Because some movies are worth watching again? Because some (a few) have DVD extras that are more entertaining than the actual movie?
I still remember the thrill and awe when I realized that for a mere $79.99 I could own a VHS copy of “Monty Python and the Holy Grail.” And watch it whenever I wanted on a bulky 19-inch TV. Oh, joy, oh, rapture!
None of which keeps me away from the theater, which is the best movie experience.
I’m guessing you are among the early-adopters downloading everything. Fine, but that model is still a ways off. And people still like their “stuff.” After all — gotta make sure Wall-E keeps his job in the future.
March 30th, 2009 at 9:48 pm
My childhood video store is actually called: VIDEO DOLLAR. And its still there. And its still a dollar.
I’m not really gonna interact with the machine. I’d rather pay a geek his 4 bucks than a machine its dollar.
DVDs are like scene problems… you come back to them with a fresh set of eyes, and there’s a whole new line of thought that’s so simple you just plain missed it the first time.
So mostly I buy DVDs because I’m a supportive writer, and its my uber-geek reference library.
Sadly, we’re in such an anti-screenwriter society that nobody would ever even know that, all the Brian Helgeland is together. Or why 12 Monkeys is next to Ladyhawk and Unforviven. Or why Titan A.E. goes next to Go. — But as soon as you put Pulp Fiction next to Reservoir Dogs, its all ok.
DVD = Good. – Approach a genre like you approach a horse. Know what’s been done. Figure out what got the last guy kicked. – Trot. – Gallop. – Cliff dive.
March 30th, 2009 at 10:48 pm
Kids’s DVDs don’t get played 200 times. They get scratched long before that, being left around the room, stacked on top of each other, fondled and gazed at by the little ones … and pretty soon they don’t just won’t even load (though not before frying the laser on the player, so after a while it won’t play anything …). Roll on digital delivery!
March 31st, 2009 at 12:09 am
King Soopers in Denver still sells DVDs for a dollar a day – quite a bargain.
As for why we buy DVDs…John, you are a technological wizard who is always up on the latest trends, and for that we salute you. However, I think people buy DVDs for the same reason that people buy books – it’s cool to have something tangible in your hands. And as long as Target keeps selling them for under $10, I’ll keep collecting them.
March 31st, 2009 at 2:06 am
I’ll agree with “Dave In DC” up above, though I’ll add, I would stop buying physical DVDs if I could also download all the extras, and easily get them playing on my TV. Yes, I know about appleTV and all the other similar devices, but I really don’t have the disposable income for another box, not at this stage — but I still have a working DVD player.
Further, while I do have a high speed connection, for the most part, as rural as I am, it’s crap, and not very fast at all (comparing it to times I’ve visited friends in other parts of the country and used my laptop on their networks).
When it becomes as affordable for me to download my movies, with my beloved extras, plus easily play them on my TV (I’ll accept a price drop in the apple-TV type boxes ) then I’ll give up physical disc buying for good, much like I did with CDs a while ago…
…save for most of Tool’s albums, as their box design is quite fun.
March 31st, 2009 at 4:16 am
Material self-interest prevents me from purchasing DVDs, not an enthusiasm for downloads or new technology. How many times am I going to watch a film? Usually just the once. If I want to watch it more than once, then I’ll rent it more than once.
I can only justify owning the DVD if I must impulsively watch it… but then how many such DVDs would I end up buying? None. A friend (a TV writer, incidentally) confessed that this only recently dawned on him. “Why am I amassing this library of movies that I’ll go sometimes years without watching again? It’s better to just Netflix it.”
If I had to speculate as to why people over-bought DVDs in the first place (far beyond replacing modest or non-existent VHS collections), it was because they wanted to signal their tastes and social status. In the MTV show “Cribs,” I recall celebrities showed off the stainless steel kitchens they didn’t use, the cars they didn’t drive and the movies they rarely watched (I do not recall anyone ever showing off the books they never read, which we’d probably just assume).
Why spend even ten dollars on a DVD? People are wising up. There’s also the looming threat of Blu-ray. If you want to watch a film you love, love, love why buy it right now on an inferior format? Just wait until you finally get that Blu-ray player.
The only DVDs I ever bought were Ghost World and The Decalog, and only because most people have not seen them, which means I can pop’em in to entertain unexpected or bored company. Or loan them out — a way of signaling my superior taste. :) (I also bought these used ’cause new is for suckahs!)
March 31st, 2009 at 6:09 am
Just like to pipe in on buying DVD’s vs digital distribution (I will assume that John didn’t mean not to buy movies at all)
I am among those people who buy DVD’s. Why? Because I prefer a physical disc, want the extra features (most importantly director’s commentary), and can create an iPod friendly version all on my own (some DVD’s even come include them as special features now). If I want to watch it on my PC; that has had a DVD Player since 2001. I’m really keeping the most options open by purchasing a physical disc IMO.
March 31st, 2009 at 6:39 am
“…the expertise of a genre video store.”
with all respect john, most of us don’t have genre video store. most of don’t have video stores that aren’t blockbusters. those are the benefits of a metropolitan cultured city. i grew up in florida where there used to be lots of independent video stores that have all been crushed by bockbusters, the walmart of the home video industry.
i have been in video stores where a woman asked for ROCKY HORROR PICTURE SHOW and the clerk asked had she looked under “R” in horror. i couldn’t find DOG DAY AFTERNOON and asked if they carried it and a clerk asked if it was new and then proceeded to tell me i was probably looking for DONNIE BRASCO. in fact, if you want to see what you’re dealing with, find one that gives the employee’s a shelf for their picks and see what you get.
i own about seven hundred purchased DVDs. i probably buy an average of at least a movie a week. on top of that i have sixty movies in my netflix queue, another sixty in my xbox queue and twenty i have bought that sit on a special shelf for when i get to them. i buy them because i love movies and i own several of yours.
the redbox cuts out the middle man. it’s exactly what it’s supposed to be. a vending machine. i ask for THE THIRD MAN and it laughs at me but if i want to watch ROLE MODELS i stand a much better chance of getting it and can remove it from VERY LONG WAIT on my netflix queue. critics are overrated. how else do you explain the four FAST AND FURIOUS or five SAW movies? i was returning PUNISHER WAR ZONE to the redbox and a guy finished his transaction and asked what i had and when i told him, he got in line again for it. then he asked if it was any good and i told him ‘no’ and he said ‘i’ll take your word for it’ and he left. who the hell am i? my favorite movies could be SHANGHAI SURPRISE and REAMGIRLS with beyonce holes. redbox are for people like my brother who rents a movie every three or four months and could easily find something in that box. it beats hovering over a return counter waiting for the returns.
March 31st, 2009 at 9:46 am
I’ve been using Redbox for a few years now.
Not so I can rent 2001: A Space Odyssey, but so I can keep up on all those movies that my friends would tell me “it’s better if you rent it.”
I find that it’s much more convenient than having to deal with overpriced rental fees and snot-nosed teenagers who say they don’t have a movie when I can see the movie I’m looking for in their return box.
I love Netflix and will be a fan forever, but this way I get that new Indy flick that I didn’t bother to go see in the theater for a cheap price and easy checkout.
Also, if you haven’t heard about it yet, they give away free rentals on Monday. You need to sign up for their text updates on the website: http://www.redbox.com/Help/Signup.aspx
March 31st, 2009 at 10:01 am
Speaking of Blockbuster’s avoidance of death — they’re testing out some new concept stores:
http://www.dallasnews.com/sharedcontent/dws/bus/stories/042408dnbusblockbuster.3880710.html
I had Netflix for a while and enjoyed it — great selection, convenient, and streaming vids (well, when I was on a PC) — but ultimately I ended up watching movies in order to “get my money’s worth”. It became a waste of time. So I like DVD Rental kiosks because there’s no (perceived) obligation, it’s just available if you want it. Plus the pricing for a casual movie-watcher is pretty comparable, and the kiosks are in grocery stores (where you have to go anyway) so they’re relatively convenient still. (Although if you wait a whole week or two to grocery shop, the cost would add up…)
March 31st, 2009 at 10:24 am
I buy DVDs of movies I watch frequently, but I use Netflix for most everything. I have used the Redbox for some new releases that I couldn’t get through Netflix because of wait times.
I’m not sure why the $1 per day Redbox is such a threat while the $4 for three days at Blockbuster isn’t.
(And Hasting’s in Amarillo had 49 cent video rentals for many years in the ’80s/’90s).
March 31st, 2009 at 12:04 pm
I do find it ironic, John, that while reading your opinion that you don’t understand why people buy DVD’s, I looked directly to the right on the screen to see you advertising your Nines DVD, now for sale at Amazon.com.
Personally, I used to collect DVD’s because I enjoyed being able to re-watch them whenever I wanted and liked the extras. I stopped when Blu-ray and HDDVD came out and haven’t started collecting again. I’ll see if I do when I finally get a Blu-Ray player.
March 31st, 2009 at 12:11 pm
As both a filmmaker and movie consumer, I have enjoyed using RedBox when, on occasion, they actually have something I want to see. (Their selection is not grand.) Netflix is amazing, but it’s not so good for instant gratification. (Yet. The streaming will get better.) For that, my first stop is iTunes, and if not, then for a new release I may go to RedBox.
I buy Blu-Rays of the movies I love, watch a ton, or want around for quality show-off purposes, but other than that, I think the days of buying every shiny disc for $25 even if you watch the movie once (or never) are over. Honestly, I’m surprised I found myself buying physical media AT ALL. I thought we were done with that, but as it turns out, Blu-Ray is great, and I’ve watched Michael Clayton 6+ times since its release, thus making sense to own. Sure, it might signal less dollars for the studios to rent, and in turn could make our budgets lower, but I think giving people that choice is easily the right thing to do.
Plus your movie could get seen by more people, since having spent $1 on something you aren’t sure you’ll like is a better risk than spending $25.
March 31st, 2009 at 1:36 pm
I don’t think John was arguing it should be digital distribution instead of DVDs. I think the argument is: if you’re paying for a service like Netflix or if you’re renting $1 DVDs, it takes many many rentals to reach the point where it’s a cost benefit to just buy the DVD.
Another issue is formats. Why am I going to keep buying DVDs when the industry has told me Blu-Ray is the new thing? Which, consequently, is part of the reason DVD sales are tanking, here in this gap between early adoption and mainstream acceptance. I love having movies to watch, I love that I can watch any episode of Avatar I want at any time. But I’m being told DVDs are obsolete already.
I think we’re at a crossroads and right now DVDs end up as a bad investment when looking at the long haul.
March 31st, 2009 at 2:20 pm
I rent from RedBox, have a netflix account, get movies ondemand, see 20+ films a year in the theater, and take movies out at the library. Libraries are FREE and their presence hasn’t destroyed the publishing (or film) industry!
March 31st, 2009 at 2:37 pm
huge fan of red box!!
http://www.nyfa.com/film_school/programs/screenwriting/
March 31st, 2009 at 8:23 pm
Here’s the problem with kiosks. Only one person can LOOK for a movie at a time. In a Blockbuster or Hollywood video, you can have 50 people looking for and selecting movies they want to see, all at the same time. Then they queue up at the checkout to pay for them.
Stores also have the advantage of eye appeal — someone sees the box cover art for a movie they may never have heard of. But the art catches them, they read the back, and decide to give it a try. This is much harder with a kiosk.
And lastly, stores can generate profitable ‘impulse buys’ — candy, popcorn, sodas, toys, special movies for sale, etc.
A kiosk won’t necessarily be a GOOD replacement for an actual store.
March 31st, 2009 at 9:46 pm
“I don’t really understand why people buy DVDs”???
I have a LOT of dvds that I have purchased over the years. So much so, that I threw away all of the cases, and put the dvds on spools.
The problem I face now, is that I just can’t find hardly any movies anymore that I will want to watch more than once.
Hollywood has morphed movies from a primary form of entertainment, to a disposable form of entertainment. Think about it. Will you be watching mostly any of the movies released this year ever again? Most likely the answer is no.
There’s something I’ve noticed over the past few years, and that is the SOUL of film making has burned out. Movies today are made by those without a heart, or a soul. This can be reflected in the movie soundtracks of today. I watched “The Burbs” for the millionth time yesterday, and I actually own a copy of the VERY rare soundtrack by Jerry Goldsmith, and I still amazed at how much that soundtrack brought to the movie.
Look at “Golden Age” Spielberg/Lucas and John Williams. It is my belief and opinion, that the movies inspired the incredible music by John Williams. Better movies gave an emotion and soul that the composer could build on. Most of Today’s movies don’t have that emotional core to build on.
April 1st, 2009 at 7:42 am
I enjoy buying DVDs for the special features. Also, by owning the disc I’m not worried about hard drive space, poor quality downloads, or having to return the disc in 1 to 3 days.
Also, Fox is planning on gimping rentals.
http://www.slashfilm.com/2009/03/12/fox-to-remove-special-features-from-rental-dvds/
April 1st, 2009 at 9:35 am
If only Redbox would follow King Sooper’s tradition of “Two-fer Tuesdays”… half my film knowledge came from $0.49 rentals every Tuesday of every summer break back in Boulder.
April 1st, 2009 at 9:39 am
I don’t see what’s so puzzling about buying DVDs. If you’re going to watch it once or twice, rent it, if you’re going to watch it a bunch, buy it. Same as the rent vs buy equation for anything else.
We own a bunch of DVDs and no regrets about most of them, we’ve gotten our money’s worth many times over. Not to mention the discs with tons of extras, that we wouldn’t have time to watch as a rental (which I think is the biggest downside for rentals).
And I don’t see how “download” has any different rent/buy connotations than “digital”. There are downloads for rent and downloads to buy, just as there are DVDs to rent and DVDs to buy.
April 1st, 2009 at 4:45 pm
@Tim W:
That DVD cover for The Nines in the sidebar is labelled “Watch Me,” and links to Netflix and iTunes, along with Amazon, which sells both the DVD and the streaming version. So, actually, not that ironic.
@Jewy Gomez:
King Soopers also had 10 cent hot dogs. That was awesome.