Thursday, March 14, 2013

Redbox Expands From Kiosk to Streaming

The Redbox model has been about accessibility with kiosks near where we shop to pick up a DVD rental for the evening.  And while the business model has worked well, the consumer still is moving to instant accessibility.  Like Netflix, Redbox has realized that they too needed to expand in order to grow the business.  The result, Redbox Instant, a joint venture with Verizon, to deliver a new streaming video competitor to Netflix, Amazon and others.  "The video service offers subscribers four DVD rentals as well as unlimited streaming of number of movies for $8 a month."

Coming later to the party poses some challenges, especially a smaller library of streaming shows and movies.  And what matters to the consumer is that the library of product to consume is not only desirable to watch, but that the library is actively growing to manage the voracious appetites of the customer.  So yes, size does matter, but so does exclusivity of content.  Demonstrate to the market that the offering is both plentiful and unique and Redbox Instant will capture market share.  It will be harder to compete from a lower cost standpoint as the monthly costs of under $10 a month makes it difficult to price too much lower.

Redbox Instant has been in beta mode with speculation of a public launch next week.  Can Redbox steal away subscribers from their competitors or are customers willing to buy into more than one streaming service?  Differentiate the value and I believe the latter is true.  At the end of the day, build a better viewing experience and customers will come.

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