Published on: May 27, 2014by Kevin Coupe
At least one of the reasons that Blockbuster Video doesn't exist anymore is that its business model - three day VHS and then DVD rentals, with significant revenue generated by late fees - was disrupted and made obsolete by Netflix, which offers both DVD-rentals-by-mail and streaming services, and Redbox, which has dominated the automated kiosk rental business.
Redbox grew its business model into one that operates some 40,000 kiosks, in c-stores, supermarkets, fast food joints and assorted other locations. But now, the bloom seems to be off the rose.
Last year, the Wall Street Journal reports, Redbox installed just 300 new units, down from 7500 new units that were installed in 2012. And last week the company announced that it is uninstalling some 500 kiosks. After helping to transform the movie business, the Journal writes, the company now is managing for efficiency rather than for growth.
The company's stagnation, the story says, "can be attributed to the fact that there are no more good locations left for Redbox machines. But the company is also contending with the growing popularity of online streaming and more original television programs." Redbox has tried to get into the streaming business, via a joint venture with Verizon, but that business - dubbed Redbox Instant - reportedly has less than one percent of the US on-demand video business.
It is a great business lesson.
There's no doubt that Redbox remains - despite its problems - a considerable force in the movie business. After all, it still has 39,500 kiosks … but those kiosks may be viewed increasingly as anachronistic, emblematic of another time … in the same way that Blockbuster gradually, then quickly, became almost completely irrelevant to how people wanted to consume entertainment products. (Especially young people. My 19-year-old daughter observed to me the other day that Redbox rarely seems to have what she wants when she wants it … and that it is far more convenient and efficient to rent via on-demand/streaming services. I'll betcha she isn't the only one who feels that way.)
How consumers consume - everything - seems to change and evolve with almost every passing day. Retailers and marketers also have to change and evolve if they are going to be relevant to these shoppers.
Otherwise, obsolescence beckons. Resistance may be futile. And even the disruptors may be disrupted.
It is an Eye-Opener.
- KC's View: