Also, Happy New Year!, but first things first…
I’ve debated this in my head for a while and although I do understand that redbox caters to a different group of people than those of us who are Netflix subscribers or even just digital cable / on-demand junkies, whenever I see the line-up by one of those boxes I just can’t help but think that it’s a flawed business model in that, well, the box can only be used by one person at a time.
It wouldn’t be a big deal if you were only picking out a bag of chips or a candy bar, but when people pick out movies, they like to browse to see what’s available before actually making their selection. And I know that there’s some feature on their website where you can browse and make reservations in advance, but in my mind if you’re willing to do that, why not just do it a day early and go pick up your movie from the mailbox when Netflix delivers it the next day? My understanding of the appeal is that you can quickly pick up a movie when you’re leaving the grocery store and then watch it that same night, just like you could with a traditional video store (but without all of the overhead and bloated fines…).
So I guess my question is this – does redbox assume that their target market doesn’t care about waiting in line for a bit, as opposed to possibly waiting longer for DVDs to come via the mail or maybe paying a monthly fee instead? It must because otherwise it seems that their business model doesn’t account for popularity and success because the more people who use it, the longer the waits are going to be and if their customers aren’t willing to accept those waits, then … oops. It just seems like a very fine line to walk for profit there because you want just enough customers renting to make the machines profitable, but not so many that people won’t want to wait to use them.
How many $1 DVDs does a machine have to rent on a nightly basis to be profitable, anyways??? Can the “vending machine” technology be that much more expensive for DVDs than it is for, say, candy bars or soda? On one hand, it’s the same price point, but alternatively candy machines don’t have the customers browse via a computer and need to be able to process returns, either. Again, I think it’s an interesting product and if anything, I’m sure it’s helping to cut into whatever remaining marketshare that Blockbuster (and friends) still have in the rental market … but will its success eventually be its own demise?
