Redbox Tests $1.15 Rentals in Portland, Ore.20 Jun, 2011 By: Chris Tribbey
Redbox is testing $1.15-a-night rentals in the Portland, Ore., area, the latest pricing test by the DVD kiosk chain that sees whether consumers are willing to pay more than the $1-a-night they’ve become used to.
Blu-ray Disc rentals remain $1.50 and video game rentals still are at $2 a day.
“We have a hard time imagining too many customers walking away from a movie kiosk because the movie costs $1.15 rather than $1,” John Kraft and Douglas Greiner, analysts with D.A. Davidson & Co., wrote in a note to investors. “A pricing pilot may take some time to evaluate and a full national price hike is far from certain. Consequently, we are not changing our estimates. However, we conservatively estimate that a national rollout of the 15% price increase could boost DVD revenues 7.5%.”
The investment firm estimates that a nationwide rollout of the $1.15-a-night pricing could add 30 to 40 cents to earnings per share for Redbox parent Coinstar in 2012.
“Given the DVD rental landscape has now shifted away from brick-and-mortar, perhaps [Coinstar’s] outlook on a DVD price increase has shifted as well,” the note reads.
Redbox has tested higher pricing in other select markets, with $1.50 in Albuquerque, N.M., $1.25 in San Diego and Modesto, Calif., and $1.15 in Miami and in Spokane, Wash. In late 2009 Redbox also began testing a pricing model in the Harrisburg, Pa., area that charged consumers $2 for the first night, and $1 each night after.