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Redbox Rising

February 8, 2012 | Author: Ibex Marketing

The physical DVD is dead; long live streaming!

That’s the conventional wisdom, but I’ve got a dollar that says rumors of the DVD’s death are premature. Why a dollar? Because that’s what it costs to rent a DVD from one of those big red vending machines that you see everywhere from Walmart to McDonalds (not to mention the two just beyond the cash registers at our local grocery store).

Yes, I’m talking about Redbox, which is the other jaw of the vice that — along with Netflix on the other side — squeezed Blockbuster out of existence. Not only is the company succeeding with $1 DVD rentals, it also now offers Blu-ray discs overnight for just $1.50. Is the strategy working? Consider two breaking news items, and you be the judge.

The most recent announcement is that Redbox will be acquiring the assets from NCR’s entertainment division, which includes the kiosks and DVD inventory of NCR’s ill-fated movie rental venture with Blockbuster. Redbox is doubling down on the DVD rental business to the tune of $100 million, according to some sources.

This announcement comes hard on the heels of its press release with Verizon. The two companies are launching a joint venture that will combine disc rentals with new video on-demand streaming and download services. In other words, what Netflix has chosen to rent asunder, Redbox and Verizon plan to offer together. And if there were some players who could have the leverage to compete with Netflix, it would be these two partners.

According to the press release, the products to be released later this year will be designed to offer “subscription services and more in an easy-to-use, flexible and affordable service that will allow all consumers across the U.S. to enjoy the new and popular entertainment they want, whenever they choose, using the media and devices they prefer.” Hmmm, a multi-modal all-you-can eat service at a flat rate? Do you think that consumers might be interested in something like that? I do. And when you consider that nearly seven out of every 10 people in the U.S. already live within a five minute drive of a Redbox kiosk, they’ve got enough bots on the ground to make this assault work.