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Redbox Upping its Northern Exposure

21 Oct, 2014 By: Erik Gruenwedel

Kiosk vendor and Netflix to represent 50% of Canadian rental market by 2016, according to report

With the Netflix juggernaut continuing to disrupt television and home entertainment ecosystems globally, Redbox is quietly piggybacking on the subscription streaming pioneer’s coattails to moderate success in Canada.

Netflix, which launched streaming service in Canada in 2010, is projected to grab 31% of the $1 billion Canadian video rental market this year, with Redbox at 8%, according to Tampa, Fla.-based Convergence Consulting Group (CCG).

There are now 1,350 Redbox kiosks in Canada since the company launched operations there in 2012, renting new-release DVDs and Blu-ray Disc movies for $1.50 and $2 a night, respectively. Redbox Canada, unlike operations in the United States, does not rent video games.

With Best Buy and Ottawa-based Zip.ca shuttering kiosk disc businesses, Netflix and Redbox are expected to significantly up their collective market share to 50% by 2016.

Home entertainment market leaders include pay-TV (and video-on-demand) and packaged-media retail. Transactional VOD and electronic sellthrough, followed by by-mail disc rental, representing about 5% and 3%, respectively, brought up the rear of the Canadian home entertainment market in 2013.

“Canada’s rental transformation has begun,” CCG analyst Brahm Eiley told The Toronto Star.

Ron Cihocki, country manager of Redbox Canada, said the kiosk vendor would continue to focus on new-release movies, leaving complete boxed set TV seasons and catalog fare to retailers and independent video stores.

Cihocki said Redbox remains the only rental channel for new-release movies in Canada besides transactional VOD platforms operated by pay-TV operators.

“If you want to be lazy and rent them through the cable company, you pay through the nose,” Cihocki said.

Redbox parent Outerwall releases third-quarter financials Oct. 30.


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