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Redbox Plans Aggressive Expansion

8 Aug, 2006 By: Jessica Wolf

Redbox has some fairly aggressive expansion plans for the near future, said Tim Hale, VP of operations for the DVD vending company owned by McDonald's Corp., at the Entertainment Media Expo Tuesday, Aug. 8.

There are currently 1,350 Redbox rental machines in McDonald's and select grocery locations in 35 states across the country, Hale said. That number will grow to 2,000 by year's end.

Next year, Redbox plans to add 3,000 new machines, another 3,000 in 2008, and the five-year plan is to have a total of 20,000 to 25,000 rental vending machines in the domestic and international markets, Hale said.

Some of those new locations will be at McDonald's stores in Seattle and Oklahoma City, he said, declining to name other specific locations.

The Redbox customer is usually on the lower-income scale, Hale said. Through the company's $1 per night rentals, Redbox has brought consumers who may have been priced out of the market back into the fold.

On average, Redbox renters take two discs for two nights, he said, making use of the ability to rent at one location and return at another.

In a few weeks, the company launches its version of online rentals, a service that will allow users to reserve a copy of a DVD online and pick it up at a specific location.

Redbox is still looking at getting into stocking new selthrough titles.

The company had a good run with it's first such title, the DVD Millions of Cardinals Memories: Busch Stadium 1966-2005, which it sold in the St. Louis area.

Redbox sold 25,000 copies at $18 each, Hale said.

The company is also contemplating game rentals, though the plethora of formats on the game side makes inventory decisions tricky on that front, he said.

Even though the Redbox consumer is far from an early adopter, the company is eager for the new high-def formats if only because they can hold so much content, Hale said.

“We like to see more content collapsed on one disc,” he said. “As it is, when a title comes in a two-disc set, we only carry the first disc.”

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