Redbox
Summary of Company
Redbox Automated Retail, LLC, is a
retail/rental service, which specializes in DVD, Blu-ray, and video game
rentals via automated retail kiosks. Redbox kiosks are located at various locations
such as; grocery stores, pharmacies, convenience stores, fast food restaurants,
and several other mass retail stores. Every kiosk has the company’s signature
red color with the Redbox logo, and an easy to use POS system. Currently Redbox
has over 35,000 locations, and offers a wide variety of new films and video
games, and updates their titles weekly. Redbox now offers a points based reward
system, which offers great discounted and free deals. Redbox also allows
consumers to reserve popular film or game titles ahead of time for quick
pickup, and has a text club to update those subscribed with different coupons
and deals weekly.
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From 2007 to 2014 Redbox was strong
competition for both Blockbuster and Netflix, surpassing Blockbuster’s sales in
2007, and had passed the 1 billion-rental mark in September of 2010. In July of
2010 Redbox began to offer not only DVD’s, but also Blu-Rays, and by 2011
Redbox had launch their video game rental system as well. Redbox winning streak
came to an end in 2014-015, when the company had to deal with different
struggles from different business ventures. Currently the company has shut down
over 500 kiosks throughout the country due to an 11 percent drop off in sales
during the last year. In 2014 Redbox attempted to have a streaming service, but
due to several unfixed issues the streaming service was shut down 19 months
after its initial launch. In February of 2012 Redbox had expanded its kiosk
services to the country of Canada, but as of February of 2015 they had shutdown
all operations in the country due to poor sales and low demand.
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Summary of Industry
Redbox, holding a majority share of
the physical disc rental market, has little no competition in today’s film
market. Due to consumers today relying on everything digital, and Redbox having
difficulty of what locations to put their kiosks, there has been little room to
grow for the company. Due Redbox removing around 500 kiosks, the company
decided to hike rental prices up, hoping to increase their margins. At first the
price increase drove higher revenues per kiosk, but the growth was short lived,
and in the long run the company became less confident about their decision.
Although Redbox still remains the industry leader in the physical rental
market, growth is still a primary goal for the company.
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In the streaming service industry, Redbox
faces a lot of competition from major competitors. Hulu, a private company
owned by Fox, Universal, and Disney, is an online streaming internet video
service which offers hundreds of TV shows and a handful of films from several
different television networks. What sets Hulu apart from its competitors is its
unique dual revenue stream, one from paid subscribers for its premium service,
Hulu Plus, and then its general service, which has advertising. Hulu has earned
ad revenue from over 1,000 brands, and may seem small compared to Netflix, but
continues to grow, having reached 1 billion in revenue in 2013.
Amazon Prime is another top competitor,
which now offers a streaming service for prime subscribers, offering over 5,000
titles in movies and television. Amazon Prime’s video streaming is free with
the annual Prime membership fee. Not only will you receive the ability to
stream different television shows, and movies, you also receive unlimited 2-day
free shipping with no minimum order size. Amazon Prime is now more of bonus
with its streaming service added to the package, but still manages to be a
major competitor, and has major growth opportunities.
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Netflix is the heavy hitter when it comes
to streaming services, with over 6.3 U.S. million memberships in 2014. Netflix
has a variety of film and television titles, as well as Netflix originals shows
and movies, strictly for subscribers for the service. Netflix also offers
renting DVD by mail, and has expanded to Blu-Ray, and allows you up to 3 DVD or
Blu-Ray disc out at a time for less then 20 dollars a month. Unlike it
competitors Netflix has expanded internationally successfully to North,
Central, and South American, and some countries in Europe, and wishes to expand
to China and Japan as well. In 2015 Netflix remains the top streaming service,
and continues to rapidly expand and grow.
Summary of Opportunity
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Redbox has several opportunities for
growth due to unique qualities it has over competitors. One major advantage and opportunity is its
partnership with the video game industry. American consumers have spent a total
of 2.47 billion on new game software, hardware, and physical retailers in the
United States in the year of 2015, which is a 2 percent increase from 2014, and
continues to grow. Redbox can expand its reach by offering more video game
titles, and PC game rentals, which just hit an all time high in 2014 as well. Redbox
can offer a new type of rental service of paying weekly, rather then monthly,
which will allow consumers to test out the game, to see if its worth the $60
purchase or not.
Redbox also can revive the streaming
services by fixing the minor issues it previously had with Redbox instant. What
Redbox has over other streaming services such as Hulu, and Netflix, is it has
movie titles that are just released on DVD, and Blu-Ray. It can take months, to
maybe even a year for Netflix to receive huge blockbuster movie titles such as
“Avatar”, “Frozen”, and “The Avengers”. Redbox can partner with the different
movie studios to offer new releases through streaming, similar to Direct TV’s
pay per view. With Netflix Instant consumers where able to keep the rental for
up to 30 days, and 48 hours after the consumer has began the movie. With the
expansion of video game rentals, and a new streaming service will give Redbox a
completive advantage by being innovative, and meeting consumer demand.
Summary of Marketing
Decisions
Advertising would be a key factor in marketing a new expansion for video game titles at Redbox kiosks. To differentiate themselves from its competitors, Redbox could use a celebrity as their spokesperson for the new video games services that are available at the kiosks. Call of Duty has had several actors in their advertising campaigns for their new video games, recruiting actress Megan Fox, and actor Michael B. Jordan for their more recent game release ads. By hiring a celebrity spokesperson, we can create buzz and interest for the new endeavor, creating brand awareness. Redbox can create online and television ads that correlate with video game theme, as well as print ads.
Advertising would be a key factor in marketing a new expansion for video game titles at Redbox kiosks. To differentiate themselves from its competitors, Redbox could use a celebrity as their spokesperson for the new video games services that are available at the kiosks. Call of Duty has had several actors in their advertising campaigns for their new video games, recruiting actress Megan Fox, and actor Michael B. Jordan for their more recent game release ads. By hiring a celebrity spokesperson, we can create buzz and interest for the new endeavor, creating brand awareness. Redbox can create online and television ads that correlate with video game theme, as well as print ads.
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For
the new and improved streaming service for Redbox, a better a approach then
advertising could be relying on word of mouth. You tend to not see very many
commercial ads for streaming services, compared to other products. The company
can do test runs with consumers that are either popular video or YouTube stars,
or bloggers to create a buzz and a positive word of mouth for the new service. The
company can use print and media ads as well, but not as extensive as the
company would do for its new video game rental service and expansion.
Summary of Recent Article
In current news, Redbox president
Mark Horak is resigning is position. Horak has been with company for almost two
years, and first started his career through marketing for Warner Bros., and
eventually ran the studios physical video, digital, and video game businesses
in North America. CEO Erick Prusch will fill as an interim for the company,
until a replacement is found.
Horak has chosen to left due to
movie rentals falling short of his expectations for the company. Horak believed
that the kiosk movie rentals had not met targets for Redbox, and did not blend
well with the Hollywood movie mix. A statement was released the company
appreciates Mark’s contributions to the company and remain confident in
Redbox’s position. He also stated that the company “will remain focused on
driving increases in both unique costumers and rentals and driving improved
top-line performance while controlling costs and creating efficiencies”.
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“Redbox
President Mark Horak to Step Down” Etan Vlessing 12/8/2015
