Redbox Could Be Transformed by Streaming Service

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DVD distributor Redbox has moved into the streaming media business. The first reaction by many is that the industry is too crowded with huge companies such as Amazon and Netflix. However, the Redbox customer base may be different enough from these others that its plans may work.

The company’s management announced:

Redbox, America’s destination for new-release home entertainment, today rolled out Redbox® On Demand. The new On Demand service, now in public beta, complements Redbox’s new-release offering at kiosks by delivering a broader selection of movies and TV shows via transactional video on demand (VOD) and electronic sell-through (EST).

In addition to renting and purchasing at kiosks, Redbox customers now have the option to rent or purchase for streaming. Purchased content can be downloaded, perfect for offline, on-the-go watching. As consumers continue cutting the cord and abandoning costly cable subscriptions, On Demand offers an à-la-carte solution with the instant gratification that today’s consumers also crave.

The Redbox target has been entirely people who go to its more than 40,000 kiosks to rent DVDs and games. These people are clearly late to the rotation of people who have abandoned DVDs for streams. These “late movers” may be a universe that has not been captured by Amazon or Netflix. If they had quit the Redbox model, its kiosks would have very little business.

So, the open question for Redbox is whether there are millions of people who never adopted streaming at all or see it as a major alternative to streaming. Are those people ready to move into the “stream only” or “stream mostly” category. If so, Redbox will have a successful business. Getting into a business late is not always a failing strategy if it involves customers who waited to the late innings to change the way they consume premium content.