This article about Redbox is quaint and suggests some recent trends. First, other stuff I've read about Redbox pretty much indicates that it's a boon for downscale and techphobic consumers who aren't utilizing services like Netflix, and so pay a higher per unit price for rentals than otherwise would be the case. So though Redbox is putting downward pressure on the DVD sales & rental market, this seems a case where the studios want to maintain "cash cows" in the form of consumers who simply aren't making recourse to the internet for various reasons (25% of Americans are not on the internet, and of those who are a minority are still on dial-up for various reasons and so aren't on the VOD market).
Then there are the quaint critiques:
Mr. Engen is enlisting lawmakers to attack Redbox for renting R-rated movies to underage viewers -- the machines simply ask customers to confirm that they are 18 or older by pressing a button -- and trying to rally the Screen Actors Guild and other unions.
Come on. This is 2009, not 1991. I know, I was a kid in 1991 who was aware of the allure of R-rated films. Today many young people will turn on porn filters when searching when they have to do research on something serious for school. Imagine that, porn as an irritation. The rating system is useful insofar as if you are a parent who wants to take the family to the movies, you know what to avoid (though I think my parents were not expecting naked breasts in Critters II when they took me to it, because it was rated PG-13, so they're a rather coarse indicator). But if your kid wants to view something nasty it's trivial today to do that via the internet (if you have parent filter on, chances are there is a local library that doesn't, etc.).
But another interesting point is the decline in profitability of the DVD industry. This is a technology which has been mainstream for less than a decade, but already it looks to be beyond its peak. The format might live on, but the physical object of a DVD is now getting to be a hassle for people who have already shifted from having CD collections to a having a playlist in iTunes. The video cassette industry was around for 20 years, so this seems a case where technological change is occurring faster today than in the past. VHS tapes were ubiquitous from the early 1980s to the early 2000s.
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I pay Cox $53.99 a month for a 20/10 connection. On that I have my Vonage, Skype and MagicJack services running for a total of $33 a month. I have a $14.95 a month account with Netflix and I watch most videos online.
Factor in hulu.com, et al and you understand why I don't pay for a TV signal. It's $101.94 a month for all the above services but lets look at it this way.
Prior to this I had Cox for CATV and net service at $89 a month. My phone service from Verizon was $47 per month. That works out to $136 a month. So I'm saving $35 a month doing it this way.
Redbox offers immediacy and the 'impulse buy'. Netflix, VOD, and online (at least for now for most people) isn't immediate for high quality video.
There is a niche which may last for a while.
I worry about things like Redbox because they drive down prices for consumers (usually good), but not by offering better products or operating more efficiently at producing the same quality of product -- after all, they don't create any of the content.
So, it's not similar to a case where, say, Disney produces such great movies and is run so efficiently that they can strike deals with retailers for $1 DVD rentals, while their competitors *in the movie-making industry* cannot. Then the cheap DVD rentals are OK.
If Hollywood as a whole takes a greater and greater beating at the box office, and if their DVD sales continue to plummet, where is their revenue going to come from? (You can see it now: 5-minute ads interrupting the movie every 10 minutes.) Remember, that lost revenue is going to Redbox, which does not produce any content. So it's not like a single studio going down because a better studio is putting out better products or putting out equivalent products more efficiently.
This is all just qualitative worrying -- I don't know the magnitude of the damage Redbox, etc., will cause. Video rental stores and Netflix don't seem to have killed Hollywood, so maybe Redbox won't either. But Blockbuster charged a lot more, and so didn't drain as much away from Hollywood's box office and VHS / DVD sales.
But you can see where the extreme would lead -- Hollywood creates a movie that's released in theaters where hardly anyone sees it, then releases it for sale on DVD (or whatever), where hardly anyone buys it. Instead of a $10 movie ticket or DVD purchase, they spend $1 to rent it for a night.
That hardly seems like a sustainable business model. They'd still make movies, but talk about low-budget! Even after slashing their useless Vice Presidents' salaries, and dialing down the superfluous amount of special effects, they'd still have almost nothing to work with.