Case Analysis: Redbox

Stefan Marroquin
31 January 2012
Strategic Management
Dr. Mark S. Poulos

Introduction Redbox is a leading provider of movie and game rentals in the Nation. Redbox offers self-service DVD rentals through over 22,400 kiosks throughout the United States, Puerto Rico, and the United Kingdom. (McGraw 20) In 2004 Redbox began spreading automated vending machine kiosks containing by and large new release movie DVD’s in high traffic shopping locations. Its products and operations include Kiosk DVD rental, online disc rental reservation, no late fee, recently released movies, and video game rental. (Hoovers) In February 2009, Coinstar Inc., who is also a leading provider of money transfer services and self-service
Large competing companies such as Blockbuster and Netflix offer services through store chains and e-commerce websites. It would not be feasible for new smaller companies to enter the market. Redbox is no longer the only company providing automated kiosks services to customers. Blockbuster has recently invested in its own kiosk service, however Redbox continues to have a significantly advantage in the number of locations and price. The customer base consists of casual movie watchers from all demographics who have discretionary income to rent and buy movies. The large movie studios such as Universal Studios and 20th Century Fox have the ability to determine the product cost in this industry.
Internal Analysis (Non-Financial) Redbox continued growth in the movie rental market depends upon a number of factors including: product, price, marketing, and distribution. Redbox provides its customers with over 22,400 automated movie rental kiosks with over 200 different movie titles to choose from. Each kiosk has a wide variety of movie genres which includes mainly new titles. (McGraw 20) In addition customers are subject to no late fees and have the option to purchase a movie at any time. The prices of DVD rentals are lower than its largest industry competitors, Blockbuster and Netflix. Redbox charged a rental fee of $1 per a day and typically sold previously rented DVD’s at $7 each. (McGraw 20) With a wide variety of titles and low prices