Redbox: Competing in the Movie Rental Market

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Case Details:

Case Code : MKTG261
Case Length : 11 Pages
Period : 2005-2010
Pub Date : 2010
Teaching Note : Not Available
Organization : Redbox
Industry : Service / DVD Rental
Countries : US

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

The company established its automated kiosks in the Washington region first and the 12 self service movie rental kiosks were mainly in the form of an experiment. Its main business of dispensing convenience products folded up quickly but the company allowed the 12 automated movie rental kiosks to continue functioning as they had attracted the attention of the customers.

As of 2010, after more than 7 years, what was started as an experiment by the then owners, McDonald's Corporation⁴ (McDonald's), had spread throughout the US. By 2007, Redbox had edged out Blockbuster Inc.⁵ (Blockbuster) in terms of number of locations.

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As of December 2009, it had its kiosks in about 22,000 sites across the US and had rented out more than 450 million DVDs.⁶ By September 2010, Redbox had increased its number of kiosks to 24,000 sites. Along the way, it had time and again silenced skeptics who felt that its business model would not be sustainable in the long run and that the company would not pose a serious threat to established players such as Blockbuster and Netflix Inc⁷. (Netflix), or to chain DVD rental stores...

Excerpts >>

4] McDonald's Corporation is a US-based company and is one of the world's leading fast food chains.
5] Blockbuster Inc. is a US-based chain of movie rental stores.
6] Brooks Barnes, "Movie Studios See a Threat in Growth of Redbox," www.nytimes.com, September 6, 2009.
7] Netflix is a US online service provider of movie rentals and video streaming. As of 2010, Netflix had a DVD rental franchise with 20 million subscribers who paid a monthly fee of about US$12 to borrow DVDs and download streaming versions of select films and TV shows. Netflix's online library included around 20,000 titles. (Source: "Redbox Needs to Move at Sonic Speed to Catch Netflix," http://blogs.forbes.com, August 31, 2010)

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