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.