Redbox Case

Redbox

Situation:

Netflix and Redbox have both changed the DVD rental business in their own way. The old ways of going to a Blockbuster and renting a movie are slowly disappearing. In this era of technology when customers want their product fast and easy, Netflix and Redbox have led the way. Netflix has emerged as the largest service for renting and streaming videos while Redbox has revolutionized the DVD rental industry with kiosks. Today, Netflix and Redbox are both looking to switch to digital and compete for DVD rental shares as competitors look to do the same.

Complication:

Rivalries Buyers Supplier New Entrants Substitues

Blockbuster We are Sony Blockbuster Express Download

VOD Preference Universal Music

ITunes Choice MGM Book

Sudden link Rating WB Movie theatre

In 2004,Redbox began deploying self-service kiosks containing new release DVD movies. Their plan was to put these kiosks in high traffic shopping areas so that customers would be baited into renting a DVD. Redbox has strategically placed their kiosks at popular fast food restaurants and grocery stores. Mitch Lowe estimated that every week 150 million people walked within 10 feet of one of Redbox's nearly 20,000 locations (Gamble, 2012). This is very attractive to customers because it is conveniently located and the rental price is one dollar a day. These kiosks are also user friendly because of the touch screen technology and the credit card payment method. Next, Redbox has obtained copies of DVD titles through licensing agreements with several major movie companies. This is crucial, as customers want to see movies as soon as they are released to the public. As a result of these reasons discussed above, Redbox has become a major player in the DVD rental business today. At first, Redbox's business model did not seem viable at all. Redbox's one-dollar rental was thought to be cannibalizing their own sales. They have proved critics wrong and are continuously luring away customers away from company giants like Netflix and Blockbuster. Although Netflix still has the majority of the DVD rental Market share, Redbox is growing at a steady pace. In the future, Redbox has planned to offer movie rentals in Blu-ray disc form to accommodate customers who made the switch from DVD players. In addition, Redbox is prepared to take on the growing trend of 3D entertainment. It has also made available popular video game titles for numerous gaming consoles to satisfy gamers who beat games in a couple of days. Redbox has noticed the shift to digital and has announced its intention of entering the online streaming business dominated by Netflix. Even without this addition, the future still looks bright for Redbox, as a number of customers still prefer physical DVD's.

Motivation:

Redbox Five Forces

Powers of each force:

Rivalry among the competitors is very high and