Redbox Chief: 'We Are an Engine for Industry Growth'

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I have to agree with and applaude Jon. Though it has $1 rentals Red box's only concern is greed. Greed is what it all boils down to and trying to monoplize the video rental business with cheaper rentals than anyone else period. Yes, its a tough economy and everyone including me want to save a buck anywhere possible but at the expense of the brick and mortars or the quality of movies made including everyone behind the scenes of movie making. Then everyone wonders whats wrong with the economy. Ask Redbox owners exactly how much of that money made is put back into your LOCAL economy or how many local people they employee. We need the jobs supplied by local businesses and I for one will not visit any business with Red box location in it.

Redbox doesn't even make up 20% of the rental market. How could it mathematically be the cause of the 13.5% decline in sell-through? I didn't realize TheWrap.com's audience was so uneducated on the issue. Especially those that own video stores.

No one wants to pay $25 anymore for a DVD that they'll just watch once and add to their "library". Enough said. Retailers can combat $1/day rentals by lowering the price of DVD's. It's the same thing with how new CD's used to cost $18-$22.

Redbox Roulette: Gambling With the Industry's Future
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nowBuzz up!Published: October 07, 2009
TheWrap recently ran a blog post by Redbox CEO Mitch Lowe titled, "We Are the Engine for Industry Growth." Lowe states that Redbox’s business -- based on $1 DVD rentals -- will "grow overall interest in and purchase of DVD entertainment."

As the CEO of a Hastings Entertainment, a retailer that pioneered low-cost rentals, I understand firsthand Lowe’s enthusiasm for $1 DVD rentals. Consumers love the price, and we love the increased business that $1 DVD rentals bring.

But there is one crucial issue involving $1 DVDs that Lowe fails to address -- and it must be acted upon if we want to prevent what is happening to the newspaper industry from happening to the entertainment industry: We must prevent the devaluation of new entertainment products.

We simply cannot give away products that cost hundred of millions of dollars to produce or else we will end up just like the newspaper industry, which now has an unsustainable business model.

Once the main product of an industry is artificially devalued, the negative economic impacts will ripple throughout the industry, impacting the workers and businesses that rely on the overall industry. Let's not create a modern-day "Goose that laid the golden egg" parable.

I believe there is a solution that allows Redbox to continue charging $1 for DVDs -- on a release schedule that fits in with the current model of the entertainment industry. The movie business has an established release model -- called a windowing model -- based on releasing movies, pricing tickets, and selling and renting DVDs. Instead of disrupting this model by renting $1 DVDs as soon as they become available, Redbox needs to compromise by integrating itself into this established industry model.

Here is how the release windows work: The studios initially provide their movie to theater owners, enabling them to provide consumers with national access to a wide variety of films. Then that content goes to the home entertainment window, where consumers can buy or rent a physical copy or an electronic copy of a film. The content then travels to the pay TV window, and finally to cable.

The Redbox $1 movie rentals cannot expect to disrupt this model without having disastrous consequences for the income streams of the movie industry.

For example, if new releases would be available for $1 rental, consumers would be encouraged to forgo watching a movie in the theaters and instead wait a few months. Consumers would be discouraged from renting from bricks-and-mortar video stores -- putting these stores out of business and reducing access to the thousands of movies that can't fit into a kiosk. Consumers would be discouraged from watching the movie on pay TV or streaming to their computer for $3.99 when the movie can be rented for a single dollar. Consumers might not buy a DVD if they know they can rent it occasionally for just $1. And the examples go on and on. If movies are devalued in this way, those who work in the movie industry will be directly harmed. Reduced industry revenues will mean that fewer movies are produced -- directly reducing the number of jobs available to people who work both in front of and behind the cameras.

These negative impacts are not theoretical. The decision by the management of newspaper companies to give away their product online is now having extraordinarily serious economic consequences -- not just for the management of these newspaper companies, but for the workers and reporters who have lost their jobs by the tens of thousands.

Mitch Lowe’s approach to $1 DVD rentals might make him a lot of money in the near term, but it will destroy the entertainment business and result in thousands of lost jobs in the months ahead. There is a way to prevent that from happening if Redbox would try to work with the entertainment industry instead of against it. $1 movie rentals have a role in the entertainment industry's "windowing model," and if Redbox truly has the consumer's best interests in mind, it will work with the studios on an appropriate release model. Now that would be a true win-win-win for Redbox, the movie studios and consumers.

"Wah wah wah" Sell-through is down because most new movies coming out today are pure crap. People are also getting fed up with studios triple and even quad-dipping to get people to buy the same DVD over and over again.

Redbox isn't the problem bad movies are!

I sure hope that nobody falls for this retoric.

Quoted from the article:
Redbox customers found that 20 percent of Redbox rentals reflect customers who were not renting DVDs before the introduction of Redbox.

These renters would be the ones who use the free codes. Not only does redbox devalue DVD's they give them away free. This 20% are the ones who use the free codes so they are not adding renters to the equation they are just giving stuff away further wrecking the economics in the industry.

Redbox has created a fire-sale environment that has destroyed the perceived value and the lifespan of DVDs.

The claim that Redbox has brought consumers "back into" the DVD market is quite a stretch because Redbox uses close-out pricing to do it.

The bargain is indeed what consumers want, but all of us--consumers and producers alike--know this is laying the groundwork for the demise of an entire business segment. Of course the consumer (me, too!) wants something for a buck. Just ask McDonalds or Jack in the Box...they offer an occasional $1 sandwich to bring people into their stores. But the difference is, they will make additional sales of normal-margin product, and they will eliminate the $1 sandwich eventually. Redbox does nothing but scuttle the marketplace with $1 product that cannot be eventually eliminated and that does not support normal-margin auxiliary sales.

Further, Redbox cripples the indie film industry. This article doesn't even mention the damage to indies. All of the suspect claims are solely allocated to the Studios. But Redbox destroys one of the major resources for indie films: the rental store visit that provides consumers with a wide variety to choose from, allowing the consumer to discover indie titles. Redbox machines offer only a dozen or so titles per machine, and as indicated in the article, only Studio titles.

But things change. $1 rental machines only hasten the demise of a market that has suffered other assaults and may not survive.

Those of us who want indie films to exist will have to find new markets and revenue streams to exploit in order to attract investors and make more movies.

Right now, Redbox makes a machine that gives Redbox $1 and indie filmmakers nothing. Yes, they are successful. They are fire-selling and killing a revenue stream that had been critical for the survival of the indie film biz.

This is a joke. What is Mitch trying to do damage control after Fox and Warner responded to redbox's complaints? Obviously he is trying to skew everything in redbox's favor. He must not feel to confident in winning in court.

Here I'll do the math....
Redbox rented it's 500 millionth DVD recently. Everyone of those has been flooded back into the market as previously viewed DVD. I would say it's only obvious that redbox has been a huge factor in the decline of sellthru.

This article is a lark. It sounds like Mitch commisioned this himself. This is just another attempt to win in the court of public opinion because they don't feel they can win in the court of law. (PUBLICITY STUNT) just like savelowcostdvds
For every one sided statistic this article is showing I can show you one that says the exact opposite thing. But what it comes down to is this statistic that red box can't deny ----Sell Thru is down 13.5% Rentals are up 8%. Why is this? REDBOX REDBOX REDBOX. They like to have their cake and eat it to taking all the credit for the rentals being up but pointing the finger at the economy or other things for sell thru being down. Well common sense alone tells you that when someone like walmart is trying to sell a product in the back of it's store it's not going to sell very well when the same produst is in the front of the store being given away with free codes or $1 a day rentals.
What redbox is doing is they have taken a product (packaged media) and had the perceived value of that product completely sucked out of it with their predatory pricing all in an attempt to grab market share. Never before has a product in so few of years been desimated like what red box has done to packaged media. They have made a motion picture that took untold millions to make and made it no more valuable then a can of pop out of a vending machine.
Then redbox acts victimized because the studios don't want to allow them to further ruin this industry. But do you know who the real victims are here? It is the brick and morter stores, the below the line workers on the sets, studios big and small, the quality of films being made(consumers), and the quantity of films being released(consumers).
Red box even in this article touts how they are bringing a billion dollars to the studios who have signed with them. What they are not telling you about is the couple of billion dollars these studios are going to lose just to get that 1 back.
Red box is bringing to the enertainment industry the same thing that the internet brought to newspapers distruction. They are asking the studios to give up the dollars they make on sell thru for pennies to be made on rentals. The problem with that is those dollars go along way and support an entire industry ( a majority of that being below the line workers)
This does not even take into effect the loses to local economies that red box is causing with closure after closure of brick and mortar locations. This is in line with what walmart did to local economies and local retailers like hardware stores, grocery stores, etc..
I personally applaud all studios who are standing up to redbox in their efforts to protect the entertainment industry.
I like how this article states..... Some blame decisions, others blame the economy, the changing media landscape. These are all lies the biggest contributing factor to the problems in this industry is redbox and their predatory pricing!!!!!!!!!!! No matter how much they sugarcoat it sellthru down 13.5% rentals up 8% do the math.