The Future of Redbox: Part 3
Ablang
The Future of Redbox: Part 3
Posted on Aug 14, 2009 under news
This is part 3 of the 3 part series “The Future of Redbox”. Read parts
1 and 2 here: part 1, part 2.
It has been an interesting past week in the world of Redbox. Redbox
made a deal with another studio, but also saw 2 other studios try to
limit their success. Now Redbox has filed a suit against one (Fox),
and another suit (with Warner) may be just days away.
I planned out the 3 posts in this series in advance, and knew exactly
which topics I was going to cover in each one. However, the events of
this past week could change the future of Redbox – and even the DVD
rental industry – forever. Let’s see where this rabbit hole may lead
us…
The basis of this post comes from a simple quote from an interview
Redbox President Mitch Lowe did about 2 weeks ago. I didn’t cover this
interview, but instead decided to write this series. Here is the
quote:
Though digital media is not anticipated to immediately increase,
Redbox is well positioned to succeed in both the digital media and
physical media space. Our future strategy encompasses both “clicks”
and “bricks.” We have what no other digital distribution company can
claim: a physical presence through our retail partners at over 17,000
locations and growing. And, we are uniquely positioned to host
conversations with our customers throughout their consumption of
entertainment media, in whichever format they prefer.
Do you see what Lowe is pointing to here? Look at the quote again,
with emphasis added:
Though digital media is not anticipated to immediately increase,
Redbox is well positioned to succeed in both the digital media and
physical media space. Our future strategy encompasses both “clicks”
and “bricks.” We have what no other digital distribution company can
claim: a physical presence through our retail partners at over 17,000
locations and growing. And, we are uniquely positioned to host
conversations with our customers throughout their consumption of
entertainment media, in whichever format they prefer.
A very telling quote, indeed, Mr. Lowe. Clearly, Redbox is not just
looking to milk the DVD cow for the time being, but they have a future
strategy that includes digital media in no small way. The question is:
how will they do this?
This is where the events of the past few weeks really come into play.
As can be seen by recent deals they have made, Redbox wants to have
the studios on their side. The deals with Sony and Lionsgate are a
step in the right direction of Redbox wants to enter the digital media
game. But, the less helpful relationships Redbox has with Universal,
Fox, and now (possibly) Warner take them away from making their
digital future a reality.
Why are these deals so important? The studios completely control the
distribution of their films through digital media. There is no “first-
sale doctrine” that Redbox can call upon to distribute films
digitally: they must work directly with the studios in revenue-sharing
agreements.
In recent days I have used some strong language – even if Redbox has
not – in the recent “delayed release” demands Universal, Fox and
Warner have made. I think it is a terrible – not to mention stupid –
move by the studios as they reach out to try to grab as much money as
possible as their business models continue to fail. Most of these same
companies are also in the music business: do they not know that the
movie business is heading in the same direction?
While these things I have said are my words and not Redbox’s, you can
still feel the disdain and somewhat “neener-neener” attitude Redbox
has with these studios, in light of the first-sale doctrine being on
their side. I believe I am just saying what Redbox is really thinking,
and that might not be such a good thing.
Redbox knows the future is digital. While it might not happen this
year or next, it will happen in the next 5 years, just like it did to
the music business. I mean, who still buys CDs anymore? I haven’t
bought one in years. Today, I rarely buy DVDs. It has nothing to do
with Redbox, I just simply don’t see a need to buy a movie on a dying
medium, when I know I will have much easier access to anything I want
to watch in the future. In the meantime, companies like Redbox and
Netflix get my entertainment dollars. If it wasn’t for them, I just
wouldn’t watch movies much at all.
So, the bottom line is that Redbox wants to enter the digital space.
They will likely do so by leveraging their kiosks and website. While
they probably won’t turn their kiosks into the next “drive-in”, they
will need the big studios to make their dream a reality. Can they
still do it?
Share your thoughts in the comments, and be sure to share this post
with anyone you know who likes to watch movies, as the future of the
industry may well depend on you (and them).