Redbox has just launched a movie store. It hopes its name and existing customer base will help it succeed in an already crowded marketplace. However, a declining rental market and entrenched name-brand competitors make success anything but certain.
Chapter 1: Redbox launches an online movie store (0:20)
This week, Redbox followed through on its promise to launch an online movie store. Redbox On-Demand is now live, and visitors can buy and rent movies immediately. Rentals start at $3.99 for two days, and purchases start at $9.99.
Redbox customers can watch their movies on Roku, Chromecast, Samsung Smart TVs, and iOS and Android devices.
Movies can be downloaded or streamed. It is not clear if the Redbox store is compatible with the two most popular online digital movie lockers: Disney’s Movies Anywhere and Ultraviolet.
Chapter 2: Not a good time to launch a movie store (1:32)
It is a very bad time to launch an online movie store. DEG says that transactional VOD (TVOD) revenue was down 4% year-over-year (YoY) in Q3 2017. Despite TVOD’s poor performance, it is doing better than Redbox’ bread-and-butter Kiosk rentals. They fell 14% YoY in Q3.
Electronic movie sales have done better. They increased 7% YoY last quarter, but the market is still relatively small.
TiVo says that the number of people using TVOD stores fell 3.5% between Q2 and Q3 2017. What’s more, every store saw their customer base decline. Amazon, which has the largest market share at 14.6%, lost 2% of its customers. iTunes, the second largest at 7.1%, lost 0.5%. All the other stores lost customers too.
Chapter 3: Tough challenges ahead for Redbox On-Demand (3:18)
Redbox believes its name and existing customers will help make its movie store a success. However, this did not work for Blockbuster. As well, the two dominant stores have large captive audiences. There is little chance that people using Amazon and iTunes will opt to switch to Redbox On-Demand.
The future does not look bright for Redbox or its new online movie store.