Redbox, the movie vending machine company, has cut a deal with Time Warner Inc.’s (NYSE: TWX) Warner Bros. studio to release movies earlier than under a past agreement. Redbox has been pressured by video streaming operations from leaders that include Amazon.com Inc. (NASDAQ: AMZN) and Netflix Inc. (NASDAQ: NFLX). The Redbox model has become something of an anachronism, so the new, earlier release model is essential to its future.
The company said:
Redbox, America’s leading destination for low-cost new release movie and video game rentals, today announced a new agreement with Warner Bros., that will make theatrical new release DVD and Blu-ray Disc™ titles from Warner Bros. available to rent at Redbox seven days after their retail sell-through date.
“Our latest deal signals Redbox’s steadfast commitment to making new release entertainment readily available to consumers across America, for as low as $1.50 a night,” said Galen Smith, CEO of Redbox. “With thousands of new kiosk installations planned this year and next, Redbox remains focused on delivering the freshest content, at the best value, nationwide.
Redbox has not retreated in the face of streaming media companies, at least so far. It has 41,500 rental kiosks and plans to add a net 1,500 this year. Redbox was part of Outerwall, which was sold to private equity firm Apollo Management and some of its related funds for $1.6 billion in July 2016. The deal included the assumption of some debt.
Outsiders have questioned whether consumers eventually will move completely to streaming media for premium content. That presumes every American eventually will have broadband and additionally agree to the $7.99 to $11.99 that Netflix and its rivals charge every month. Redbox charges $1.50 a day for DVDs and $2 for Blu-ray versions. The company also rents video games for $1 to $3 a day. Redbox also sells some of the products at price points that start at $11.99.
So far, the Redbox gamble that people will rent or buy movies and videos from kiosks sprinkled around the country has held its own as a business model. Moving release times forward may help it stay in the game.