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Redbox Testing Monthly Charge, With Digital Download

By : Chris Tribbey | Posted: 10 Nov 2009

In addition to testing higher rental prices as well as game and Blu-ray Disc rentals, DVD rental kiosk operator Redbox is testing digital downloads, said Paul Davis, CEO of Redbox-parent Coinstar Nov. 10.

“We are testing a partnership to look at digital opportunities where a consumer can come in and prepay on a monthly basis, and they get X number of [packaged media rentals],” Davis said at the Merriman Curhan Ford investor summit in New York. “Then [they get] a digital download [rental] at a discount or free price.”

Redbox is testing the digital downloads with CinemaNow. A selection of Redbox’s most active customers can buy the pre-paid rental packages including the digital download at redbox.com, the company said. Sonic Solutions, which runs CinemaNow, would not comment on the arrangement.

“We see digital as a space that will continue to grow,” Davis said. “We think this is a space we should be testing in. We first have to see if there’s interest from our consumer base.”

Eric Wold, analyst with Merriman Curhan Ford, said “the morphing of the two models could work very well.”

“I do not think that all consumers are ready to pay the current cost of a digital download for all of their movie-viewing experiences and the combination of the two price points and rental models could help Redbox straddle both sets of consumers,” he said.

Also Nov. 10, Davis said during the third quarter, an average of 900 new Redbox kiosks were installed per month, and that the company could install 10,000 per year going forward.

“We see a lot of white space,” he said.

Regarding Redbox now having to visit retail stories to buy new-release DVDs from Warner Home Video and 20th Century Fox Home Entertainment, Davis said Redbox hasn’t had to add any new employees to keep the kiosks stocked. Those two studios and Universal Studios Home Entertainment have prohibited their wholesalers from selling to Redbox.

“We’re not adding head count,” Davis said. “We’re not putting more feet on the street,” Davis said.

While not dismissing the idea of a delayed window for new release titles from those studios, Davis did say that it would hurt Redbox more than other rental companies, such as Netflix, to delay new-release titles.


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