retail news in context, analysis with attitude

MNB took note yesterday of a New York Times story on the continued expansion and success of Redbox, which rents DVDs from in-store kiosks for $1 per night. The suggestion is that Redbox is successfully taking advantage of an economic that favors low price rentals, and that many customers still are willing to go out to rent movies, as opposed to download them onto their computers.

My comment: I still think that Redbox is a retail concept with an expiration date. We don't know what it is yet, and in fact it could be more than a decade off…and these could be very profitable years for the company. But it is inevitable that downloading eventually could take over.

MNB user Ben Ball responded:

If it is “inevitable” that downloading take over – then why does Best Buy still sell music and movies and Borders still sell books? Some people will always prefer the physical over the digital some of the time. That is also “inevitable”.

MNB user Connie Montgomery wrote:

It depends on the costs of downloading. A person would need a rather "large" hard drive to hold movies; high Ram, and an exceptionally fast connection. I have DSL and it is not real fast on downloading anything with pictures. I can just imagine the speed of downloading a movie. I doubt those services are $1.00 per movie.

Personally, most movies seen once is enough. So why download it? For $1.00 at Redbox, it can't be beat to me. They are in so many places. I drive 7 miles to work each day, and I counted them, after the last Redbox discussion, and I pass 4 Redbox locations every day. What can be more convenient than that. There are about 10 within 1 mile from my home.

I only buy on DVD for a movie that I will watch more than once--i.e. Titanic, Dirty Dancing. Only the great ones are worth watching again.


And another MNB user chimed in:

Redbox will have an expiration date that will follow right behind broadband accessibility. Hard as it may be for you to believe, there are still chunks of the United States that do not have either affordable broadband, or any access at all. Until that changes, no one will live long enough to download a movie over dial up. And I have to note that my son, who has had high-speed access via cable for years, is a fan of Redbox.
I think it's a case of he doesn't think about watching a movie until he sees the kiosk while he's grocery shopping.


One MNB user responded:

Sure downloading COULD take over.

Real Estate investors have been saying this since Blockbuster started expanding in the 80’s. What is taking the consumer so long to catch up?


Look, I’m not suggesting that this is going to happen overnight.

But, it also strikes me as shortsighted to suggest that this isn’t the long-term play. It means that broadband will have to be everywhere, it will have to be faster than it is today, and hard drives will have to have a lot more memory than most do presently. But that’s all going to happen. It is inevitable.

I’ll bet you that Best Buy doesn’t sell a lot of music these days. After all, that’s why the Virgin superstores closed in the US…just not enough business in a world where music downloading is the rule not the exception. If it can happen to music, it can happen to video.

Inevitably.
KC's View: