It's been a busy day for Redbox. First, they announce that they're teaming up Verizon to launch a Netflix competitor, and then they buy the Blockbuster kiosk business from NCR. From Fast Company:
Coinstar, the company behind DVD-kiosk service Redbox, today announced it had would acquire NCR's entertainment business for as much as $100 million. NCR, once the central rival to Redbox through its Blockbuster Express brand, operates thousands of kiosks which will now come under Redbox and Coinstar's control.
The announcement comes on the heels of another company announcement earlier today that Redbox would be partnering with Verizon for a subscription-based streaming competitor to Netflix. Now, with NCR's entertainment business under its belt and a digital service in the works, Redbox is in a strong position to shake up the entertainment and retail industries, especially with its 35,400 point-of-sale kiosks already dotting the landscape. And as if today's announcements weren't enough, Coinstar also reported that its quarterly profit had doubled today, jumping to $31.5 million.
Blockbuster sent out an email to notify customers about the change, and here is the text of that email:
Dear Valued Customer,
NCR, which operates your Blockbuster Express kiosks, has entered into an agreement to sell its kiosks and other assets to Redbox. Until the transaction is completed (we anticipate in the third quarter of 2012), you will continue to enjoy the convenience, choice, and value you're used to from BLOCKBUSTER Express. Until the sale is completed, we will continue to run the business as we have been, focused on bringing you the latest New Release movies with most titles only $2 for the first night. You'll also notice that we've increased our In-Stock Guarantee value so you will now enjoy a movie night on us with a value of up to $3 if we don't have the New Release movie you want in stock.
As a reminder, we still have 100s of great movies available at $1 and additional nights of all movies are still only $1, all part of preserving an exceptional value for an affordable night of entertainment.
We'll continue to provide you with information on any changes that result from this recent announcement but for now we just wanted to say thanks for being our customer.
Thanks to Sean, Joseph, Martin, Maxaroon, and everyone else for sending this in.
Knew this was coming. Just didnt know when.
My guess is they end up shuttering some boxes when they have underused boxes nearby.
Will be interesting to see if they are going to rebrand them all.
I dont think this helps conumers any because there is ONE dvd by box renter versus two. That will keep prices high and maybe even higher.
Posted by: rj | February 07, 2012 at 05:14 AM
Glad RB can use the hardware. Good riddance BB kiosk.
RB seems to be wanting to take on NF directly. They are still small potatoes though on the cash front to make that happen but they are making changes to alter that.
Good for them. Maybe they won't pursue the same stupidity NF has made in the last year and will run their company smartly as NF once did.
Posted by: Chris | February 07, 2012 at 08:44 AM
DVDs are a dying medium. Good for Redbox, and I mean that...but they are playing a game that will end soon enough. Make it while you can, fellas! There is still a market out there, and you can pocket some nifty change from it before you move on to the next venture.
Posted by: Former Netflix Employee | February 07, 2012 at 08:53 AM
$100 million for how many boxes? Wouldn't it have been more cost prudent for Redbox just to let the BB kiosks fade away? My supermarket still has a DVDXpress kiosk. I'm assuming there are others, so no "monopoly" yet.
Posted by: Robert Emmerich | February 07, 2012 at 10:03 AM
DVD rental kiosks play right in to P.T. Barnum's assessment of the American public. They don't make money on the rentals...they make money on the late fees. Its a smart, albeit opportunist, way to make some cash. They're taking a big risk dumping out $100mil, but - having talked to so many idiots over the phone re: DVDs - they'll make it back in late fees within 18mos.
Posted by: Former Netflix Employee | February 07, 2012 at 10:37 AM
I don't recall Barnum saying anything about late fees. Not that Redbox has them. Unlike BB (store, not kiosk) there aren't any tricks to Redbox.
I don't understand this deal but I suspect there are terms that we aren't privy to. NCR got out without loosing too much and Redbox must have had some pot sweetening. Most likely access to places that have BB kiosks and probably some hefty discounts on manufacturing.
NCR seems like they have given up direct retail and are falling back to their core which is manufacturing. A smart move. Make the machines and let someone else worry about logistics.
Posted by: Marshall | February 07, 2012 at 11:40 AM
I think it's a smart move on Redbox and NCR, Redbox is well known while the BB kiosk wasn't. There are Redbox kiosks everywhere in my town but I've only seen five BB kiosks(mainly in grocery stores), Redbox rentals are climbing(34% of the market) and NCR can't compete. I'm sure Redbox/Coinstar will buy all the other rental competitors by next year.
Posted by: moviegeek | February 07, 2012 at 12:02 PM
I do maintenance on these machines for NCR. They're used by a surprising amount of people in my area, and they were directly competing with Redbox and Netflix to get exclusive rental rights for the first 30 days (until Redbox decided not to play that game a few days ago). Anyway, I hadn't heard anything about this, but I doubt the current kiosks can be upgraded to store Redbox style cases so they'll probably just remove them.
Posted by: Truck | February 07, 2012 at 11:27 PM
@rj, Redbox just had their first price increase since their inception, so I doubt prices are going to be rising any time soon.
@Former Netflix Employee, DVDs/Blu-rays aren't going anywhere anytime soon. I'm sure there's at least five years, probably more, as far as rentals go. And I mean of any disc-based media. (Just in case 4K should happen to come out in America by then)
@Robert Emmerich, Blockbuster has about 10,000 kiosks. At $100 million, that's $10,000 each. Of course, you're getting the inventory, the NAME/Brand, the location contracts, etc.
Posted by: Walt D in LV | February 09, 2012 at 07:34 AM
I admittedly have only been using the BB kiosks with free codes I got (from Safeway deals, and a few other things), but their lowest price is $1. Isn't RedBox's lowest price now $1.20?
My netflix acct is now on hold, and I already switched down to 2 disc only (then put it on hold).. I'm semi-seriously wondering if I'll go back to NF full time again.
Though I wonder what will happen if people have codes that should have been valid after the changeover.
Posted by: bigqueue | February 14, 2012 at 06:49 PM