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Redbox to Offer Online Service

28 Apr, 2006 By: Jessica Wolf

Redbox, the DVD-rental vending-machine company owned by McDonald's Corp., will begin offering its shoppers a new online service this summer.

A firm kickoff date has not been set, but in a few months Redbox renters will be able to do an inventory check on the Internet for their Redbox location of choice, pick out a movie, pay for the rental online, then swipe their card at the vending machine to get a DVD.

As usual, renters can return the DVD to any Redbox location. Redbox has 806 machines at select McDonald's locations, currently operates kiosks at 27 Smith's stores in Las Vegas, and plans to have 70% of the 24-hour Kroger Co. unit stores in Salt Lake City and Albuquerque, N.M., covered by June.

All Redbox machines are networked back to the company's headquarters in Chicago, where an inventory database for all locations is stored and updated instantly, said Greg Waring, VP of marketing. It's an industry leading innovation that gives Redbox yet another competitive advantage, he said.

Redbox already has a mix of impulse users and frequent shoppers, Waring said, and the new online function will help with the company's already good track record of turning that impulse renter into a premeditated, destination-type user.

The company will launch the online service with signage on the machines themselves and a marketing campaign closer to the date it goes live, he said.

Redbox also continues to experiment with sellthrough strategies, such as the provider's recent offering of Buena Vista's Lady and the Tramp and The Chronicles of Narnia: The Lion, The Witch and the Wardrobe in four cities for $20 a copy.

“We're in discussions with a lot of different people about different ways to approach sellthrough,” Waring said. “We're going to try a whole bunch of ways and see what our customers prefer.”

The $1-per-night rental service will likely evenutally offer high-definition discs, Waring said. But for now, Redbox, like many others, is in wait-and-see mode about the new format and will make high-def inventory decisions accordingly."We're going to listen to our customers on that one," he said.

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