Saturday, July 27, 2013

Is Redbox Not Growing Fast Enough

While the world of streaming media is moving faster than light, shareholders of Redbox are worried that they are not capturing any of the momentum.  Their mainstay product, DVD rentals from vending machines is still ongoing but its Redbox Instant business has not found its footing.  Analysts fear that the rollout of Redbox Instant, a joint venture with Verizon, is not being pushed out quick enough.  Certainly there has been little marketing to indicate that they are ready to compete head on with Netflix and Amazon. 

Expectations are high that the DVD business has room to grow.  "In Q3, studios will release DVDs for eight films that generated at least $100M at domestic box offices, up from three in the period last year, when studios didn’t want to compete with the London Olympics."  They also cite more closings of Blockbuster stores.  But the future for rentals lies in streaming content and Redbox Instant has yet to deliver its own exclusive video content to gain traction against its biggest rivals.  Netflix not only has original content but has also nabbed a number of Emmy nominations.  When awards are announced in September, Netflix will continue to get great media exposure for its service and exclusive content.  I'm sure Amazon is already pressing to build some possible nominees for next years awards.  Redbox Instant must deliver its own original content to remain a competitive threat. 

Streaming video networks are still a nascent industry; consumers are quick to sour on a platform as Netflix showed when it misplayed its DVD business.  But they were also able to bounce back.  For Redbox Instant and others hoping to compete in this space, the challenge is in building a great platform with compelling original and syndicated content that consumers are willing to shell out a monthly subscription to remain a member.  I see tremendous opportunities ahead for Redbox and others to compete in this space and to ultimately take more subscribers away from cable.  My one advice, history repeats itself; follow what cable did to take broadcast share and do the same to take share from cable. 

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