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Analyst: Redbox Benefiting from Netflix Moves

13 Oct, 2011

There was speculation that when Netflix instituted its price increase Sept. 1 DVD kiosk operator Redbox would be the beneficiary, and now one analyst is offering data points to back it up.

Michael J. Olson, senior research analyst with Piper Jaffray, wrote in an Oct. 12 research note to investors that Web traffic to Redbox.com was up 34% year over year during the third quarter (Netflix announced its price increase in July), and up 46% year over year during September, when the price change took effect.

“Search trend data from Google supports a dramatic uptick in Web activity surrounding Redbox as consumers look at alternatives to replace or supplement new-release movies from Netflix,” he wrote.

Google search interest for Redbox was up nearly 39% quarter-to-quarter through Sept. 21, he said.

Additionally, Piper Jaffray conducted a survey of 250 Netflix subscribers in September, and found that 10% planned to quit the service, and 18% planned to use Redbox more often. Twenty-two percent said they were switching to Netflix’s streaming-only plan, and of those, 64% said they would replace Netflix DVDs with Redbox.

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