Tag Archives | Redbox

Redbox Game Rentals Go Nationwide, Filling a Void Left by Blockbuster

Redbox is coming to the rescue of video game rentals, adding games to every one of its ubiquitous DVD kiosks.

Starting today, all 21,000 Redbox kiosks in the United States will rent video games for $2 per night. That’s more expensive than Redbox’s $1 per night movie rentals, but it’s on par with Blockbuster’s game rental rate of $9 per five nights, and is more flexible.

And besides, Redbox kiosks are easier to find nowadays. After Blockbuster declared bankruptcy in September, the number of U.S. stores in operation dropped from 3,300 to 1,700. Redbox is hoping its grocery and convenience store presence will lead to more game rentals. “We make it very convenient by having our kiosks in front of the places people are at every day,” Joel Resnik, Redbox’s vice president of games, said in April when the company announced its game rental plans.

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Redbox Gaming is Expanding

Video games seem like a natural way for Redbox to grow, so I wasn’t surprised when the kiosk operator started testing video game rentals last year. According to Variety, Redbox will soon expand video game rentals to “a few thousand” of its 24,000 kiosks, across 40 markets.

But Redbox isn’t going all in just yet. The company is still deliberating whether to take video game rentals nationwide, and hopes to get a better sense of customer interest by adding games to more kiosks.

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Redbox May Do Gaming, But It’s a Tough Sell

Redbox wants to do for gaming what it did for movies by offering nightly game rentals from its popular kiosks.

According to Reuters, Redbox is talking with game developers (publishers, more likely) about renting games for $2 per night. The company won’t say which publishers are involved, but THQ, the company behind Saints Row, said it would consider the idea. Redbox is already testing the program in Wilmington, N.C., and Reno, Nev.

There are only two problems: Just as Blockbuster is following Redbox’s lead with movie rental kiosks, Redbox was beaten to the punch by Gamefly, which has been operating G-Box kiosks since March. More importantly, as I’ve experienced first-hand, renting video games through kiosks is unpleasant, at least with the business model that both companies are pursuing.

Game rentals are fundamentally different from movie rentals. You can watch a movie in one evening, but you can’t play an entire game in one night without a four-pack of Red Bull, and possibly the next day off from work. The real money from game rentals, I suspect, is made when you keep that game beyond the first day. That’s probably why Gamefly constantly sends me coupon codes for free rental nights. (Seriously, they’re like AOL demo discs in e-mail form.)

Unfortunately, the G-Box costs $2 per day, the same price Redbox chose for its pilot program. If either kiosk operator is serious about game rentals, it needs a weekly price scheme for considerably less than $14. As it stands, gaming by kiosk makes the most sense for people who want to try before they buy — and the G-Box does let you purchase games from it. Otherwise, you’re better off renting from a place that won’t put you under so much pressure. There’s enough of that going on in the games themselves.


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A Path to Save Blockbuster?

Is copying Redbox’s strategy a way for Blockbuster to survive? I’m beginning to think so.

Earlier this week, I rented from a Redbox for the first time. I have walked by these kiosks in our area for well over a year now, and in recent months they’ve become quite numerous — Redbox lists 19 of them within 10 miles of my house alone. The allure of a movie for just a buck a night is just too good of a deal to pass up.

While entering my selections into the kiosk — Star Trek and Angels & Demons — I couldn’t help but wonder why Blockbuster wasn’t doing the same thing. Heck, it costs you $5 to rent these same movies at their stores no matter whether you return them the next day or however long your local store allows the movies to be out.

It’s for this reason why Blockbuster is struggling. In this new world, it no longer is worthwhile to have a storefront because of the overhead costs. Think about it. Netflix has considerably less infrastructure costs because all its business is online and only needs shipping warehouses to serve its customers; Redbox has even less overhead since it essentially freeloads off the locations where its kiosks sit.

There’s just no way that the company can be on a level playing field with its competitors because of this. Tuesday’s news of the company partnering with NCR to place 200 “Blockbuster Express” kiosks in Duane Reade Drugstores across New York City could arguably be Blockbuster’s path to salvation.

When the company is done, about 2,500 kiosks will be up and running around the country. Each will hold about 900 DVDs, which will give the movie retailer an opportunity to offer a wider selection than that of Redbox, which can only hold about 500 discs.

As the company moves to this system, it will allow Blockbuster to continue closing down its retail locations, which have become its Achilles heel. This will stink for those employees that could soon find themselves out of a job, but its just a reality of our modern digital economy.

It’s going to be very interesting to see how Redbox responds. Blockbuster eliminated its competition by simply being able to offer a broader selection of movies than its smaller competitors, and now the company that arguably pioneered the movie rental kiosk finds itself in the same situation.

One thing it has so far as an advantage over Blockbuster is scale — some 17,500 kiosks are located in McDonald’s, Wal Marts, Walgreens, and other grocery and drug stores around the country. Blockbuster will need to quickly ramp up to legitimately compete.


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