Will Redbox DVD rentals steal iTunes’ download thunder?
Those increasingly ubiquitous red DVD vending machines found in the foyers of supermarkets and big box retailers have caught the attention of the movie studios, grabbing market share from traditional retail rental outlets like Blockbuster and Family Video. If the idea that movie rentals should cost just a buck, even Apple’s iTunes could find itself losing sales to the upstart.
Quoting data from an SNL Kagan study, LA Times reports that online video-on-demand services, such as Apple’s iTunes, could suffer if Redbox DVD kiosks and their $1 rentals catch on in a significant way.
“It could just have earth-shattering consequences to these services hoping to reach people through the Internet,” said Wade Holden, entertainment industry analyst, SNL Kagan. “It would be a colossal shift for the rental market to go from $8.03 billion to $1.74 billion — a change studios are likely not to get on board with.”
Why Redbox?
For our family, Redbox makes great sense as the local Wal-Mart has one located just inside the door, which makes it easy and convenient to pick up a couple gallons of milk and snag a flick — the whole procedure, including the moo juice, takes 10 minutes.
Further, unlike iTunes rentals, it’s pretty easy to time shift whatever movie you’ve rented and, if there isn’t time for that, it costs just a buck more for a second night, etc. In a household where both parents work, that’s rather important.
See also:
— Apple confirms Sept. 9 iTunes event, but no word on Steve, tablet
— Mac software: Metakine’s Fairmount is a better way to rip DVDs
— How to: Download and convert Flash video on the Mac
Thereupon, Redbox has inked concurrent new release deals with Lions Gate Entertainment, Sony and Paramount. The other major studios — 20th Century Fox, Warner and Universal — have sought contracts that specify a waiting period between a title’s DVD release and when it becomes available via Redbox.
However, given iTunes’ near zero incremental distribution costs, Apple’s online movie download store could compete effectively with Redbox or any similar venture. The question is, however, whether the movie studios have the foresight and wisdom to save themselves.
Given the example of the major record labels, which most believe are in a death spiral, there’s good reason to feel pessimistic about Hollywood’s chances.
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