Redbox as the Business Model of the Future

The world of entertainment is constantly changing and improving. Thanks to technological innovation, the movie and music industries are becoming more and more user-friendly. With the advent of Apple’s iTunes and iPod, it is now possible to carry around your ten thousand favorite songs right in your back pocket without dealing with the inconvenience of CDs. And thanks to Netflix, watching your favorite movies has never been easier as you can essentially watch any movie of your choice by streaming it to your computer or Xbox. With the incorporation of technology into all of these entertainment processes, there’s never a need to come face to face with another person to watch a movie or listen to a song. Has the time come where physical discs are obsolete? Is it possible that DVDs are dead? Redbox would say no!

Redbox, created in 2004, has created a virtually hassle-free way to rent and watch DVDs and Blu-Ray Discs. Perhaps you have walked through your local mall and/or down a street in your town where there has been a giant red box. And perhaps upon seeing this box, you wondered to yourself, “Hm, what is the purpose of this red box?” So you decide to go over and see what’s inside. What you would find, is a selection of the latest and greatest movies! Whether inside or outside, each Redbox is equipped with an interactive touch-screen design that allows you the opportunity to scroll through a large selection of movies that are now literally right at your fingertips. With a capacity of about 600 DVDs, Redbox’s usually have anywhere from 70 to 100 different movie titles available for your choosing. Once you decide what you want to watch, all that’s left is to swipe your debit/credit card and grab your movie! Oh, and I forgot to mention… renting a movie only costs $1.20 a day!

It’s clear that DVDs are not dead. Why do you think people still listen to records when the same songs are available on iTunes in better quality? Although it’s not completely synonymous (I actually very much enjoy listening to old records), there is something bucolic about watching a DVD (at least for the time being).

More importantly though, Redbox is successfully using a business model that will undoubtedly become the norm in the future. It has already been introduced into other consumer industries; for example, many grocery stores have implemented self-check out aisles. I predict that the strategy Redbox is using is the beginning of the end of human interaction in the consumer experience. Instead, the consumer will have a very automated experience in purchasing basic, everyday, goods and services. Such a model would work in essentially any business. Picture a fast food drive thru window. Fast food restaurants will no longer employ people to work the late night drive thru windows. Instead, there will be an interactive screen, very similar to the one on a Redbox, that allows you to drive up and choose what you want. Some fancy, innovative, piece of technological equipment (that is way over my head) would receive your order and provide you with the food. A fellow classmate of mine, Taylor Kenyon wrote a blog entitled “Using Technology to Replace Low-Wage Workers” that discusses how scientists and researches are developing a 6-foot tall hamburger-flipping robot to work at fast food restaurants. And this is only the beginning. The world of consumption will definitely experience significant technological changes and I presume that many more industries will soon adopt a completely automated system of interaction between business and consumer, similar to the one presented by Redbox!

If you want to see how easy it is to choose a movie using Redbox and learn about the proper Redbox movie selection etiquette, check out this short video! http://www.youtube.com/watch?v=GdxaoNFTSZQ

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8 thoughts on “Redbox as the Business Model of the Future

  1. Great Post! Just as we though that DVD rentals is history, a new way of doing the same thing (renting out DVDs) emerges! This business model seems to be the next step! WIth just a box, many previous expenditures (formerly assets) that destroyed Blockbuster are eliminate and Redbox shows that DVD rentals still possesses a certain level of demand. Automation seems to be where the world is heading. It will be interesting to see how the low skill worker survive in a world where automation has taken away their livelihood.

  2. I thought this was a great post and it was extremely informative. I have used Red Box frequently in the past and I still learned a lot more about it just by reading your post. However, I disagree with you when you say that organizations like Red Box and their business model will become the norm in the future. Obviously there is an advantage over “brick and mortar” rental stores like Blockbuster—no membership required, movies can be returned at any Red Box location, etc. But Red Box’s business model has many of the same components that led to Blockbuster’s demise. For example, any given Red Box holds a very limited selection of movies, and there is a chance that the movie you want is out of stock at the time. Also, it is only logical for Red Box to hold new release movies, but this prevents them from being able to profit from offering movies that would be classified as part of the “long tail” ; these movies have the potential to make up a significant part of a firm’s profit, as they do for Netflix. Although the convenience of Red Box is a large part of its competitive advantage, they don’t have much going for them beyond that. It seems to me that Netflix still has a greater edge in the world of entertainment.

  3. I thought this was a very interesting post that creates an interesting discussion. I think that it is a very innovative design that really utilizes its core competency: its convenience. People would not drive somewhere to find a box to rent a movie but the fact that you can pick up a movie while you are grocery shopping or already out is the factor that is the most appealing. This could also be appealing to a different market of people who maybe don’t watch movies enough to benefit from the monthly subscription part of Netflix. Netflix can get pricey if you are not utilizing it to its fullest. I think that this is a good idea that Redbox started but I think there is more room for failure than for growth. There seems to be a more limited market for these films because of the market that Netflix has taken away. People who have a Netflix subscription are unlikely to rent movies here that they could get with their already purchased subscription. This was a really interesting post and I think elucidates many points of this company’s business model. Great post!

  4. This post is great! As a proud user of Redbox, I think this blog was very informative in telling that the DVD is not yet obsolete. My family is one of the very few that does not have a Netflix account because the four of us simply do not have the time to watch it on a regular basis such that it is cost efficient. With our grocery store (with the Redbox) only two minutes driving distance, it is not a chore to go rent a movie and return it the next day, especially when the price is so cheap! Redbox is a wonderful alternative to Netflix; we can watch movies at our leisure without having to worry about a monthly cost and available titles are always updating so we never have trouble choosing a movie that interests us. Obviously, Netflix has a reputation for putting movie rental companies out of business, Redbox is putting up a good fight and is still flourishing.

  5. Very informative post! It’s great to see that Netflix did not drive all of its competitors into the ground as it did to Blockbuster. Redbox provides an efficient system when it comes to cheap, easy DVD rental that can occur in various locations as people go about their day to day errands. I read a different post pertaining to Netflix teaming up with Facebook with the mission of allowing viewers to get Netflix recommendations based on what their friends have watched. I wonder if Netflix has any plans or method of teaming up with Redbox in the future in hopes of perfecting the movie and television viewing market. If not, with Netflix subscriptions on the rise, it will be tough for Redbox to continue profiting in the future.

  6. I am interested in your post for two opposite reasons. For one, I don’t think this is a business model of the future, as I see Redbox struggling from similar problems to that of blockbuster having capital (renting space, machines). Second, I think this old-fashioned technique may actually work due to “eyesight attraction” (yes, I just made that up). When a customer walks out of, say, a grocery store, and sees the Redbox machine, all of a sudden they might be in the mood to watch a movie later. It’s genius advertising and obviously works. Nice blog!

  7. Good article and post. I think that Red Box’s kiosk idea and technology will survive. I do not think its business model will last. They lack scale, the long tail effect, and simply cannot beat the convenience of streaming.

  8. Pingback: 10 Ways To Ditch The Rat Race… For Good | MIDDLE-AGED MAN BLAH'G

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