Renting a DVD from a Redbox kiosk is as easy as getting a Snickers from a vending machine and costs about the same too. The $1-a-night DVDs can be returned to any of Redbox’s 22,400 kiosks, which are located in supermarkets, McDonald’s, pharmacies and strip-mall parking lots — pretty much anywhere consumers are already headed. My local supermarket has a Redbox kiosk in each entryway, and I sometimes bribe my kids to behave while shopping by promising them we’ll rent Cloudy with a Chance of Meatballs on our way out. Should we fail to return it, the most we’ll be charged is $25 — or about the cost of a new DVD.
(See the top 10 movies of 2009.)
Redbox is one of the Great Recession’s great success stories. In 2009 it added one new location per hour and made twice as much in revenue — $774 million — as it did in 2008. But studio execs aren’t happy that many consumers who used to amass big video collections are now more likely to be entertained on the cheap by Redbox, on-demand cable services that usually charge $5 or $6 for new releases or Netflix, which costs $9 per month for unlimited DVD exchanges.
(See 10 things to buy during the recession.)
On Feb. 16, Warner Bros. (which is owned by TIME’s parent company, Time Warner) cut a deal that makes it easier and cheaper for Redbox to acquire its DVDs; in exchange, Redbox agreed not to rent the studio’s movies until 28 days after their DVD release. In those first four weeks, 90% of a typical DVD’s sales occur. Netflix has agreed to the same waiting period, and other studios are expected to make similar deals.
Of course, for cheapskate consumers who have already waited five months since a movie’s theatrical debut to see it, having to hold off for four more weeks may not be that difficult. “We asked customers what was most important to them,” says Redbox president Mitch Lowe. “It was saving money.”
(See more ways to save on Brad Tuttle’s blog “It’s Your Money.”)
One provision of the Redbox deal, however, seems downright wasteful, even mean-spirited. The kiosks, in addition to renting movies, have been selling two-month-old DVDs for $5 to $7. But under the new agreement, once Redbox is done renting a Warner DVD, it will be destroyed. (It will be recycled, but still …) The logic here is that if customers can’t buy used DVDs from Redbox, they’ll be more likely to purchase new ones at a Best Buy or Walmart.
How much will the Warner Bros. agreement hurt Redbox? Not a whole lot, according to Tom Adams, principal analyst of California-based Adams Media Research. “Consumers know they’re still getting quite a deal,” he says. “I mean, it’s a dollar. People will find something they want to watch. It’s not like they’re going to walk across the parking lot to a Blockbuster.”
That’s especially true because in many places, there is no longer a Blockbuster across the parking lot. Last fall the brick-and-mortar video giant announced it was closing about 1,000 stores, or one-quarter of its locations.
(See the best movies of the decade.)
Recently released DVDs are often in short supply at both Redbox and Netflix. After seeing the words very long wait next to The Hangover at the top of our Netflix queue, my wife and I decided to race the rental services against each other. Every time we passed a Redbox, we checked if it had the movie in stock. After two weeks, Redbox prevailed, and we removed the title from our Netflix queue.
So here’s my new formula: Use Redbox for big releases and Netflix for lesser-known stuff. And true tightwads should use the public library. Ours lends films for seven days at no charge. After that, late fees kick in at $1 a day, at the same price as Redbox.
See 10 big recession surprises.
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