Redbox is in court with half of the studios, and is in restrictive contracts with the other half over the explosive growth and popularity of the DVD rental kiosks.
Mint, an online financial management tool, took a close look at how their users
spent money on movies (click on the image to view at full size).
Note the $3 spent per purchase for Redbox, and the huge increase in Redbox transitions in the past few months.
Combine this information with the NPD report (via NewTeeVee) forecasting huge growth: "Kiosks to Make up 30 Percent of DVD Rentals Within the Next Year; that’s up from 19 percent this year; in the first half of ‘09, video rental stores made up 45 percent or the rental market and subscription services accounted for 36 percent." The studios are seeing a rapid devaluation in what consumers expect to pay for movies, and it could really hurt their cash cow: DVD sales. Why buy a DVD for $10+ when you can see it for $1 - $2?
Another interesting number is the decrease in Netflix subscribers from 11.7% in 2008 to 8.8% in 2009. The Mint users are probably early adapters (my Dad still won't bank online), so could this be a sign that Netflix could be hurt by the explosive growth of DVD kiosks?
Netflix is obviously watching Redbox closely, but Netflix CEO Reed Hastings had this to say about the DVD rental kiosk company stealing 5% of Netflix customers: "I'm not surprised by the 5% and as Barry mentioned at the recent investor conference, we don't see in the two markets that Redbox outlined as very strong penetration for them, Houston and Salt Lake City, we don't see any material degradation in our growth. So it appears that Redbox and Netflix are growing at the expense of video stores."
