Posted on Wednesday, August 17th, 2011 by Russ Fischer
At $1 per night, Redbox DVD rentals have been one of the cheapest ways to check out a DVD release. And at $1.15 to $1.20 per night, the company’s prices would remain low. Indeed, that price increase is starting to roll out in some markets — Redbox customers in Austin, TX and Portland, OR will face 15-20% price increases on regular DVDs as the company takes recent Netflix price hikes as an indication that the market can bear higher fees.
Variety says that blu-ray and game rental prices are remaining constant, at $1.50 and $2 respectively. But for standard DVD releases, Coinstar, which owns Redbox, is expanding the regions affected by trial price increases that had already hit cities like San Diego and Miami. This seems to point to an across-the-board price increase.
Redbox has seen tremendous growth in the past quarter, with profits rising 99%. A full-scale price increase could push that profit margin a lot higher. Ironically, however, some of Redbox’s growth is based on the fact that Netflix has lost customers who were unhappy with the price increases. In this case, a 15-20% increase isn’t likely to have a detrimental effect on the company’s rate of attachment. Not being able to trumpet “$1 per night” rentals, however, will be a marketing blow.
In the long run, it may be GameFly that has the most to fear from Redbox. Video games are now available from 29,000 Redbox kiosks after 5,000 games were added this month. Games are expected to account for up to 8% of the company’s revenue by the end of the year.