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Redbox Launches Digital Service

13 Dec, 2017 By: Stephanie Prange



Redbox is going digital again.

The kiosk company Dec. 13 rolled out Redbox on Demand in public beta. The service, which CEO Galen Smith said complements its existing physical disc rental kiosks, allows consumers to digitally purchase or rent movies and TV shows. Pricing for new-release video-on-demand rentals starts as low as $3.99 for 48 hours, with electronic sellthrough transactions as low as $9.99. Catalog VOD starts at $1.99. The service will include content from most of the major studios, including Warner Bros., Paramount, Lionsgate, Sony, Fox and Universal.

The move employs a different strategy from the Verizon joint venture that shuttered in 2014.

“That was a very different product,” said CEO Galen Smith. “This is focused on transactional video-on-demand and electronic sellthrough, whereas the other product previously was a subscription product. It was a joint venture, and we are doing this on our own. It’s a natural extension and evolution of the Redbox business.”

Redbox on Demand is available on the Redbox website, Android and iOS-enabled devices, Chromecast, LG and Samsung smart TVs, and Roku. More devices will be added throughout the beta, according to the company. 

Redbox is leveraging its wide consumer base to launch the digital service.

“We’ve got over 90 million touchpoints today, so we’re even bigger than we were a couple years ago in terms of our ability to access consumers — 44 million email addresses, 35 million app downloads between iOS and android, 8 million text club, 23 million people in our loyalty program — so that is really broad and massive reach,” Smith noted.

The digital service also allows Redbox to offer a greater number of titles, including more catalog and TV.

“We’ve got 700 slots, about 150 to 200 titles that we offer through our kiosk at any one point,” he said. “Obviously, digitally you don’t have those same size constraints.”

Redbox on Demand is not yet part of cloud locker services Movies Anywhere or UltraViolet. Disney, notably absent from the Redbox on Demand content partners, spearheads Movies Anywhere. Disney also has filed a lawsuit against Redbox for selling digital codes and has no direct agreement for supplying physical discs to Redbox.

“[Movies Anywhere is] something that we’re exploring, and we’ll take a look at,” Smith said. “There are some pretty big players that aren’t yet involved in that so we’re just looking to see how that evolves. I think that UltraViolet is sunsetting a bit. Really what we care about is what’s most interesting to the consumer, so if the consumer says one way of accessing their content is better than the other, then we’ll look to do that.”

Smith said key players in the new digital move are recent hires Jason Kwong, chief of strategy and business development, with previous experience at Fullscreen Media, Netflix and Warner Bros.; and Ash Eldifrawi, chief marketing and customer experience officer. They’ll be helping on a new mobile app and loyalty program coming in the first quarter of 2018.

As far as the physical disc rental kiosk business, Redbox continues to expand. The company planned on adding 1,500 kiosks this year, but has already added more than 1,700 so far in 2017. The company has been able to expand in the dollar store market through Dollar General.

“We do think there’s continued opportunity for us to install more kiosks in 2018,” Smith said.

“I think it’s been a fantastic year for us overall,” he added. “You look at how our content relationships have changed. You know we used to have very long windows and those have shortened with a couple of the players. Other ones have given us content day-and-date.”

As far as the new digital offering, Smith downplays competition from subscription streaming services such as Netflix and Amazon, noting that the transactional service gets new-release movies much sooner.

“I was talking to one studio head over dinner and basically, he was saying that there are no plans for their movie, which is a very big movie this year, to ever be on Netflix or Amazon for streaming,” he noted.

Subscription services aren’t focusing on new releases, he said.

“I think there’s been a lot of consumer confusion that’s been created about what goes where and when and there are a lot of movies that won’t be on a streaming service for at least a year,” Smith said. “It could be longer. It may be never. If you look even about where the streaming services are focused, they’re buying fewer and fewer movies made by the studios. They’ve both pulled back from their investment in that and their catalog, and they’re much more focused on what they’re doing around original programming.”

 


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