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Despite renting 1 million DVD movies a day in 2009, and staking nearly 17% market share in the business, Redbox is exploring electronic distribution via SD cards, USB drives, and portable media players, says an analyst.


The day after parent Coinstar Inc. reported a 50% increase in 2009 revenue to $1.1 billion, due largely to rental kiosks, John Kraft, analyst with D.A. Davidson & Co. in Lake Oswego, Ore., said Redbox would not "sit on the sidelines" regarding digital delivery.


"We believe there is, and will be, a broad base of customers for DVDs," Kraft wrote in a note to clients. "Nevertheless ... we believe the company is testing options, including a partnership with another digital vendor."


Indeed, rival NCR Corp., together with MOD Systems, earlier this year bowed digital kiosks capable of delivering DRM-free MP3 music downloads with the option for movies when that market develops.


Blockbuster, which is rolling out Express kiosks with NCR, is also considering digital distribution via SD cards and USB drives, but does not plan to make it a priority, according to Kevin Lewis, SVP of digital entertainment.
http://www.homemediamagazine.com/red...-digital-18450
 

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Discussion Starter · #3 ·

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Originally Posted by Karmyna /forum/post/18123122


If they go digital they'll lose the first sale doctrine.


They can't just rip their DVD since this is against the DMCA so they'll have to negociate with the studio, again, but this time in a position of weakness.

Can't argue that they are going to be hurt by the transition to digital. They have not made friends with the studios they are suing. And yes, they will have to negotiate with them directly.


But ultimately they have no choice but to go digital. Without having a roadmap for Digital Distribution they are a classic "buggy whip" company.
 

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Originally Posted by PSound /forum/post/18123789


Can't argue that they are going to be hurt by the transition to digital. They have not made friends with the studios they are suing. And yes, they will have to negotiate with them directly.


But ultimately they have no choice but to go digital. Without having a roadmap for Digital Distribution they are a classic "buggy whip" company.

Or they could stop rocking the boat needlessly and do what other did, that is accept the deal the studio gives them.


If they want to make more money they can start innovating in other way, like diversifying their service, yes digital is a way but not the only one. They could try to compete with netflix on the web and mail service. If Canada can have 6 online mail service going, the USA can accomodate way more than that.
 

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Discussion Starter · #5 ·

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Originally Posted by Karmyna /forum/post/18124004


Or they could stop rocking the boat needlessly and do what other did, that is accept the deal the studio gives them.


If they want to make more money they can start innovating in other way, like diversifying their service, yes digital is a way but not the only one. They could try to compete with netflix on the web and mail service. If Canada can have 6 online mail service going, the USA can accomodate way more than that.

Who is to say it is needless? Their business is low cost rental of blockbusters. If rentailers offer the movies before them, then they lose a big market advantage.


And getting into the DVD by mail business is not simple. A couple have tried and none have made a dent in Netflix. To even have a chance they would have to offer the hybrid service that is propelling Netflix (DVD-by-mail and streaming), which takes them right back to Digital Delivery.


Saying they need to "diversify" is easy, but ultimately anything besides physical media rental means they will have to work directly with studios... which would require them changing their core business (and the driver of their growth). The one thing they have going for them is that they CAN grow in the short term and make things difficult enough for the studios that maybe they can come to a mutually beneficial arrangement.
 

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Originally Posted by PSound /forum/post/18124101


Who is to say it is needless? Their business is low cost rental of blockbusters. If rentailers offer the movies before them, then they lose a big market advantage.


And getting into the DVD by mail business is not simple. A couple have tried and none have made a dent in Netflix. To even have a chance they would have to offer the hybrid service that is propelling Netflix (DVD-by-mail and streaming), which takes them right back to Digital Delivery.


Saying they need to "diversify" is easy, but ultimately anything besides physical media rental means they will have to work directly with studios... which would require them changing their core business (and the driver of their growth). The one thing they have going for them is that they CAN grow in the short term and make things difficult enough for the studios that maybe they can come to a mutually beneficial arrangement.

That is the point. They wouldn't have all their problem if they were working WITH the studio, instead of trying to impose their way of doing thing. They are too small compared to the industry to make a dent in the studios. Especially if their competitors don't cooperate with them and instead allies themselves with the studio, just like it is happening now.


As for their core business, well if it ain't working anymore then they just have to evolve to something else, or close up shop. But anything else they try to do with media will be by the studio rules not theirs.
 

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Discussion Starter · #7 ·

Quote:
Originally Posted by Karmyna /forum/post/18125487


That is the point. They wouldn't have all their problem if they were working WITH the studio, instead of trying to impose their way of doing thing. They are too small compared to the industry to make a dent in the studios. Especially if their competitors don't cooperate with them and instead allies themselves with the studio, just like it is happening now.


As for their core business, well if it ain't working anymore then they just have to evolve to something else, or close up shop. But anything else they try to do with media will be by the studio rules not theirs.

They are fine in the short term. They have weathered the storm and can be profitable with disc rentals even without the studios cooperation. Contrast that to what would happen if they put in a delay to rent new releases.


An analyst very recently noted that Redbox agreeing to a sales window (delaying rentals) would drop their revenue by 50%. That is simply unacceptable to their business model. They would indeed be better off pursuing their legal options and see if they might be able to get an anti-trust judgment against the studios.



Meanwhile they ARE impacting the studios. Redbox is already are up to 17% of the rental market. And that is on the revenue side.. their actual customer share is likely higher since they are indeed on the low end of per transaction ARPU.


Redbox directly impacts sell-through both by providing a value offering for new releases that is significantly higher versus retail sell-through and by dumping large quantities of used discs on the markets just a few weeks after a titles release. That provides downward pricing pressure on new releases. And even Redbox is reporting that the discs they are dumping on the market are losing value. Each disc is worth less as they grow and dump an every increasing number of discs on the market a few weeks after release.



Redbox is an enigma for the entire industry. They have a profitable, popular business model that greatly devalues the entire content chain. The studios may hold it against them in the long term, but there is absolutely nothing they can do in the short term except try and minimize the bleed they are causing. The studios who have entered into a relationship with Redbox have done so primarily to stop Redbox from dumping their titles on the used market. That is about the best the studios can do right now. Sure they can prevent Redbox from ever entering the digital market, but that is little consolation in the short term.


Ultimately it may be a huge boon to the consumer as it may force the studios to accelerate digital rental by bringing consumer costs closer in line to what independent vendors (like Redbox) can provide, while still protecting the sell-through model.
 

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Quote:
Originally Posted by PSound /forum/post/18125669


They are fine in the short term. They have weathered the storm and can be profitable with disc rentals even without the studios cooperation. Contrast that to what would happen if they put in a delay to rent new releases.


An analyst very recently noted that Redbox agreeing to a sales window (delaying rentals) would drop their revenue by 50%. That is simply unacceptable to their business model. They would indeed be better off pursuing their legal options and see if they might be able to get an anti-trust judgment against the studios.



Meanwhile they ARE impacting the studios. Redbox is already are up to 17% of the rental market. And that is on the revenue side.. their actual customer share is likely higher since they are indeed on the low end of per transaction ARPU.


Redbox directly impacts sell-through both by providing a value offering for new releases that is significantly higher versus retail sell-through and by dumping large quantities of used discs on the markets just a few weeks after a titles release. That provides downward pricing pressure on new releases. And even Redbox is reporting that the discs they are dumping on the market are losing value. Each disc is worth less as they grow and dump an every increasing number of discs on the market a few weeks after release.



Redbox is an enigma for the entire industry. They have a profitable, popular business model that greatly devalues the entire content chain. The studios may hold it against them in the long term, but there is absolutely nothing they can do in the short term except try and minimize the bleed they are causing. The studios who have entered into a relationship with Redbox have done so primarily to stop Redbox from dumping their titles on the used market. That is about the best the studios can do right now. Sure they can prevent Redbox from ever entering the digital market, but that is little consolation in the short term.


Ultimately it may be a huge boon to the consumer as it may force the studios to accelerate digital rental by bringing consumer costs closer in line to what independent vendors (like Redbox) can provide, while still protecting the sell-through model.

I don't believe they have the means to go after the studio in an anti-thrust court case. Especially since their competitor aren't on-board to help pay the legal cost. We all love an underdog but I personnaly think they would be biting more that they can chew.


And their dumping of used disk is what will kill them in the end because it is also hurting their potential allies aka blockbuster and netflix. Even the store where they now buy their stock are impacted by those cheap used disk.


They are litterally shooting themself in the foot.


As I see it they have two choice. One, sign the contract with the studio and accept the delay and stop dumping disk. Two, they lose all source of approvisionment because I don't see Walmart and other surface store selling disk at a volume discount to somebody who will rob them of their walk-in customer.


Either way they won't get control of the sources of approvisionment unless they can buy studios.


They are not really in a position of power presently.
 

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Discussion Starter · #9 ·

Quote:
Originally Posted by Karmyna /forum/post/18125855


I don't believe they have the means to go after the studio in an anti-thrust court case. Especially since their competitor aren't on-board to help pay the legal cost. We all love an underdog but I personnaly think they would be biting more that they can chew.

The legal costs are negligible. They stated as much in their earnings call. If it was anything significant they would be forced to acknowledge it to their shareholders.

Quote:
And their dumping of used disk is what will kill them in the end because it is also hurting their potential allies aka blockbuster and netflix. Even the store where they now buy their stock are impacted by those cheap used disk.

The dumping of discs does not hurt Netflix at all. Netflix does not deal with retail sales, and their value offering is not impacted by the used DVD market.


Blockbuster is impacted and so are the retailers, but who cares. They have already taken the best shot that the retailers and the studios can fire. Have you actually researched their financial and analyst data?

Quote:
They are litterally shooting themself in the foot.


As I see it they have two choice. One, sign the contract with the studio and accept the delay and stop dumping disk. Two, they lose all source of approvisionment because I don't see Walmart and other surface store selling disk at a volume discount to somebody who will rob them of their walk-in customer.


Either way they won't get control of the sources of approvisionment unless they can buy studios.


They are not really in a position of power presently.

Again, have you actually researched their financial filings or at least read analyst data?



Retailers are already trying to limit their access (possibly at the studios request), but that has not harmed them enough to stop their growth.


Implementing a delay would cause serious harm to their revenue.



There is nothing the studios can do to prevent them from thriving today. And any studio that does not partner with them deals with the negative impact of having their titles devalued by the massive amounts of used discs hitting the market.



Redbox has long-term issues to deal with. But today they are impacting the entire industry and there is nothing the industry can do to stop them.
 

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Quote:
Originally Posted by PSound /forum/post/18126021


The legal costs are negligible. They stated as much in their earnings call. If it was anything significant they would be forced to acknowledge it to their shareholders.




The dumping of discs does not hurt Netflix at all. Netflix does not deal with retail sales, and their value offering is not impacted by the used DVD market.


Blockbuster is impacted and so are the retailers, but who cares. They have already taken the best shot that the retailers and the studios can fire. Have you actually researched their financial and analyst data?




Again, have you actually researched their financial filings or at least read analyst data?



Retailers are already trying to limit their access (possibly at the studios request), but that has not harmed them enough to stop their growth.


Implementing a delay would cause serious harm to their revenue.



There is nothing the studios can do to prevent them from thriving today. And any studio that does not partner with them deals with the negative impact of having their titles devalued by the massive amounts of used discs hitting the market.



Redbox has long-term issues to deal with. But today they are impacting the entire industry and there is nothing the industry can do to stop them.

Yes I've been reading about it here and elsewhere. I just don't come to the same conclusion than you.


Legal cost isn't cheap, just ask SCO. It can destroy a small company when they gamble it all on the outcome of a court decision.


The dumping of disk does hurt netflix and other. It sure hurt retailer. Why should I wait for a disk to ship or satisfy myself with some subpar encodes or buy the disk at full price in the store when I can just buy the movie for 2 to 5$. Hell at that price it's a disposable commodity. Why rent and risk paying late fees when for the same price I can keep it.


Analyst and financial data can only tell you so much, just look at the financial debacle last year. Everythiong seemed fine on paper. Of course that is if what is written really reflect reality which you know as well as I am that sometime reality differs for the one who is strugling to be afloat.


Red Box is in fact a small company in the great scheme of things and as such they have the power of a small company. The studio aren't really losing any sleep over their temper tantrum, especially when they count the money Avatar brought them and how much they'll make on disk sales and merchandise. Red Box Screaming isn't heard over the noises of the cash register for them.
 

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Discussion Starter · #11 ·

Quote:
Originally Posted by Karmyna /forum/post/18126122


Yes I've been reading about it here and elsewhere. I just don't come to the same conclusion than you.

It is not a matter of even coming to the same conclusion. The statements you are using as your base of discussion seem to be lacking some basic known data.


And your premise that Redbox is not a concern for the studios is counter to every analysis I have read. Anytime a single vendor controls 17% (and growing rapidly) of a market, they are relevant. Particularly when they introduce a model that destabilizes a long existing pricing structure.
 

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Quote:
Originally Posted by PSound /forum/post/18126326


It is not a matter of even coming to the same conclusion. The statements you are using as your base of discussion seem to be lacking some basic known data.


And your premise that Redbox is not a concern for the studios is counter to every analysis I have read. Anytime a single vendor controls 17% (and growing rapidly) of a market, they are relevant. Particularly when they introduce a model that destabilizes a long existing pricing structure.

I'm sorry but I think your point of view is tainted. You seem to have a professional and personnal interest in the matter that goes beyond the simple end user.


No use to continue this discussion then since you'll never consider a point of view other than yours as valid.


Lets agree to disagree and move on.


I'll leave you the last word since you'll post it anyway.


Have fun.
 

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Discussion Starter · #13 ·

Quote:
Originally Posted by Karmyna /forum/post/18126484


I'm sorry but I think your point of view is tainted. You seem to have a professional and personnal interest in the matter that goes beyond the simple end user.


No use to continue this discussion then since you'll never consider a point of view other than yours as valid.


Lets agree to disagree and move on.


I'll leave you the last word since you'll post it anyway.


Have fun.

I just prefer to be informed. You were obviously missing some fundamental data points based on your statements. That is fine. You are basing your opinion on something other than industry, financial or common knowledge.


You should be prepared in life to be called out on your opinions when your foundation is built on tainted ground, particularly in the company of informed individuals.


Have a wonderful weekend!
 

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Quote:
Originally Posted by Karmyna /forum/post/18126484


I'm sorry but I think your point of view is tainted. You seem to have a professional and personnal interest in the matter that goes beyond the simple end user.


No use to continue this discussion then since you'll never consider a point of view other than yours as valid.

Wow. It usually takes a lot longer for someone to come to those conclusions. I guess he's got this down to a science by now.
 

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Discussion Starter · #15 ·

Quote:
Originally Posted by Steeb /forum/post/18126565


Wow. It usually takes a lot longer for someone to come to those conclusions. I guess he's got this down to a science by now.

I know that people get frustrated trying to argue with me because I actually research BEFORE forming an opinion.


Far too many people have an idea of how they think it should be and get uncomfortable when they end up on their heels during a discussion when the facts and data are stacked against them.


One of the things that I find so amusing is the false assumptions people make about my "professional" interest and the resulting ad hominems. Irrational people get very frustrated and confused by people who simply wish to expose as much data and information as possible.
 

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Quote:
Originally Posted by PSound /forum/post/18126596


I know that people get frustrated trying to argue with me because I actually research BEFORE forming an opinion.

Yeah, that's why people get frustrated trying to have a rational conversation/debate/argument/whatever with you.



I'm sure it has nothing to do with blind fanboyism or biased points of view that lead to questionable conclusions.
 

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Quote:
Originally Posted by Steeb /forum/post/18126565


Wow. It usually takes a lot longer for someone to come to those conclusions. I guess he's got this down to a science by now.



I also post on a political/religion forum so I'm used to fundamantalism.

But I must admit it's the first time I traded words with a streaming fundamentalist.


Are they prone to go mad and turn to terrorism when confronted with a viewpoint other than their own or am I safe in my home office presently?
 

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Discussion Starter · #18 ·

Quote:
Originally Posted by Steeb /forum/post/18126636


Yeah, that's why people get frustrated trying to have a rational conversation/debate/argument/whatever with you.



I'm sure it has nothing to do with blind fanboyism or biased points of view that lead to questionable conclusions.

Your frustration is right there within your post.


If you have data, facts or information to counter any of my viewpoints then please provide them.



Whenever I make a call for data people start with the personal attacks. That is always a sure sign that they have lost the argument on the merits and need to resort to antics and theatrics. I find it amusing when that happens and people start giving each other "atta boys". If that is the way someone must take solace when their unsubstantiated viewpoints are shaken, so be it.
 

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Quote:
Originally Posted by PSound /forum/post/18126733


Your frustration is right there within your post.

It is? Really? It's a good thing you're here to tell me what I was feeling when I wrote a post - otherwise I would still be in the dark.
Quote:
Originally Posted by PSound /forum/post/0


If you have data, facts or information to counter any of my viewpoints then please provide them.

Here's a fact, followed by a little speculation: You backed the wrong horse during the format war and if I had to guess, that is it the main motivation behind your nearly non-stop pimping of streaming (both here and - until the mods stepped in - other areas of this site.)


Regardless, I'm sure you're right. It's everyone else, not you. Obviously.

Quote:
Originally Posted by PSound /forum/post/0


Whenever I make a call for data people start with the personal attacks. That is always a sure sign that they have lost the argument on the merits and need to resort to antics and theatrics. I find it amusing when that happens and people start giving each other "atta boys". If that is the way someone must take solace when their unsubstantiated viewpoints are shaken, so be it.

Nice try, but you have to remember that this isn't my first encounter with you. I've seen how you "debate." I've seen you dismiss valid facts and arguments, simply because they didn't gel with what you were claiming. Sticking your head in the sand and ignoring anything that doesn't fit into your view of the world is not - and never will be - an effective debate tactic.
 

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Discussion Starter · #20 ·

Quote:
Originally Posted by Steeb /forum/post/18126767


It is? Really? It's a good thing you're here to tell me what I was feeling when I wrote a post - otherwise I would still be in the dark.


Here's a fact, followed by a little speculation: You backed the wrong horse during the format war and if I had to guess, that is it the main motivation behind your nearly non-stop pimping of streaming (both here and - until the mods stepped in - other areas of this site.)


Regardless, I'm sure you're right. It's everyone else, not you. Obviously.

Again, speculation on my motives that are far from reality. And even speculation on the moderation of the site.




The core of where this discussion ended up had nothing to do with streaming. It had to do with Redbox, their near term viability and their impact on the home video market.


Where it did not differ from other conversations is that someone was obviously trying to find justification for an opinion and trying to build (or make up) data around that thought.
 
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