Wednesday, July 21, 2010

Redbox Challenging Netflix AND Cable

As Redbox enters the internet world to compete with Netflix, there is another competitor that they will challenge as well. "The company, the biggest division of Coinstar Inc., may use a Web service to expand its library beyond the 200 or so titles crammed into each of its 24,000 or so DVD dispensers, President Mitch Lowe said in an interview from Redbox’s headquarters in Oakbrook Terrace, Illinois." Certainly they are entering Netflix's space but it is really the space owned by cable's VOD platform. Neither Netflix nor Redbox offer the volume of titles accessible through cable, but they are seen as a cheaper alternative.

In a struggling economy, the consumer is willing to spend more time to find a cheaper alternative. Cable needs to review its pricing policy and offer a range of pricing that demonstrates to the consumer that cheaper choices are available on their TV set and they don't need to look any further.

Of course, Redbox and Netflix aren't the only other players in what is proving to become a very crowded field. "Redbox also faces competition from Apple Inc. and Best Buy Co., which sell movie downloads. Wal-Mart Stores Inc., the world’s largest retailer, bought the Vudu Inc. online entertainment service in February and Sears Holdings Corp., the largest department store owner, said on June 22 it plans to sell and rent movies online through an agreement with Sonic." For the consumer, there is good news. More competition causes price wars and results in lower prices to the consumer. Unless a real quality differentiation strategy is demonstrated, consumers will always look for the lower price choice.

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