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Redbox Deal Points to Blu Skies Ahead

17 Feb, 2010 By: Stephanie Prange

One of the reasons Redbox has waved the white flag in its fight with the studios is because it is turning Blu.

Redbox executives said one of the motivating factors in making this week’s deal with Warner to accept a 28-day window on new releases was access to the studio’s Blu-ray titles.

The kiosk company plans to roll out Blu-ray rentals, which it has been testing for some time, by the middle of the year, likely at a higher rental price, according to executives. Netflix already offers Blu-ray rentals at a premium, charging customers $1 to $3 more on their monthly subscription for renting titles in the high-def format.

Blu-ray’s detractors — often digital delivery backers and Wall Street analysts who invest in that new technology — have long called it a dud, but last time I checked, getting customers to pay more for a product meant it was doing pretty well. Redbox consumers commenting on various discussion boards have indicated that they’d pay $1 more a night for Blu-ray rentals. Netflix’s Reed Hastings recently commented that the premium on Blu-ray rentals has helped the by-mail rental company grow the average profit per customer.

Blu makes more green, and one of the fastest-growing companies in the rental business adopting the format is a sign that its is gaining traction in the mainstream market, and will likely see great growth in the years to come.

The signs of adoption are all around. Consumer spending on Blu-ray purchases topped $1 billion in 2009, according to DEG: The Digital Entertainment Group. Just about everyone on my block has a Blu-ray player following the recent holiday season. Most members of my family have gone Blu. And — perhaps the biggest indication of all — I no longer have to explain to aquaintances what Blu-ray is.

There are still a few hurdles. For instance, one of my neighbors didn’t realize until last October that her PlayStation 3 played the format. (I’m sure she’s not alone.) Hopefully, Sony’s ad blitz will right that perception. Also, my mom hasn’t adopted Blu-ray, but she still has a 15-year-old TV and didn’t get a DVD player until they were $29.

Blu-ray is finally stepping into the spotlight, and, thanks to Redbox’s new deal with Warner, will soon be available at a kiosk near you.

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