The DVD rental kiosk service Redbox has been enormously successful at a time when much of the economy has struggled. The value and simplicity of Redbox’s product are prime reasons why business has been so good: a flat $1 for each day a DVD is rented. Customers had to know that one day, prices just had to rise. And that day is now here.
Starting Monday, October 31, a standard Redbox rental will cost a bit more: $1.20, rather than $1. The company seems to have learned some important lessons from its competitor, Netflix, which outraged customers by jacking up prices by 60% over the summer, later admitted it “messed up” regarding how the price hike was explained (or not), and further alienated consumers by introducing and soon killing a separate DVD operation that’s sure to live on as a trivia questions, as well as a cautionary tale, Qwikster. As a result of all this confusion and mismanagement, Netflix’s subscriber numbers and stock prices have fallen sharply.
While considering how and when to raise prices, Redbox executives surely wanted to avoid “pulling a Netflix” or going “full Netflix.” Instead, Redbox’s price increase is incremental. Rather than doubling the price to $2 a day—which the company actually considered in 2009—customers must now pay $1.20 per day for DVD rentals. The percentage increase is substantial (20%), but that’s just two dimes extra. Redbox hopes the reaction from customers amounts to something like “no big deal.” Or perhaps “well, it’s still a better deal than Netflix.”
Redbox announced the changes last night, making pains to point out that this is “the first time in eight years Redbox has raised our daily DVD rental price.”
The announcement explained that the price hike is essential to offset rising costs, including higher debit card fees that went into effect recently. After “several months of testing and with careful consideration,” Redbox went with a 20¢ increase “to best offset expenses” without scaring off customers.
The price of Blu-ray discs and video games from Redbox remain unchanged, $1.50 and $2 per day, respectively. But here’s one other noteworthy change for standard DVDs: In the past, the maximum rental period was 25 days. After being charged $1 per day, or $25 total, the DVD was yours to keep. (Not a smart move—because if you really wanted to own it, you surely could have bought it straightup for less than $25.) Now, though, if you keep a DVD for 20 days—and pay $1.20 each day, or $24 total—you’ve reached the maximum rental period. In other words, you just bought the DVD.
Needless to say, to ensure that a Redbox rental is actually a good value, it’s in your best interest to rent and return quickly. That was the case before Redbox’s price changes, and that’s the case afterward.