After rapidly expanding its $1-per-day DVD rental kiosk operation, Redbox now has roughly 29,000 movie vending machines around the country—and not that many more good possible places for installing more. So the company plans on offering digital rentals soon, entering into even more direct competition with the mail-streaming movie service Netflix. If Redbox’s digital rental service manages to copy the two best features of its DVD kiosks—cheap $1-per-day price and no membership fees—it would obviously set itself apart from Netflix, which charges members monthly. Unfortunately, the $1-per-day movie rental may not be possible online.
Why? The LA Times explains that:
In the physical world, companies like Redbox can acquire discs at standard prices and then rent them out for any fee they wish. Online, however, movie studios control access to their content and can charge a high price to distributors for each time the film is viewed. Internet rentals of new-release films typically now cost consumers between $4 and $6.
So it would be up to Redbox to negotiate with the movie studios about the minimum it could charge for digital online rentals. Translation: A Redbox download is gonna wind up costing more than $1.
For its web-movie service, Redbox will probably have to charge higher prices than its kiosks, or to start charging for monthly subscription plans, just like Netflix does. If either of these happens, Redbox will lose the features that make it special and set it apart from the competition. Many consumers love not only that they can enjoy a Redbox movie for a mere $1, but that they only pay for the service when they use it. That’s not the case when you have membership fees that must be paid no matter how much, or how little, you use it.
What happens next? Stay tuned. Considering how things are proceeding, however, I wouldn’t plan on $1-per-day, no-subscription-required movie rentals being available in the not-so-distant future—and that goes for online and kiosk rentals alike.