red box stratergy in the movie rental industry Puerto Rico Cohort 6 Business Strategy Assignment Prof. Logan By: Jessica Oliveras May 5, 2012 REDBOX POINT The Redbox’s Strategy in the Movie Rental Industry case describes how successful REDBOX has been by being the leading company in self-serve DVD rental business. They strategically placed kiosks where the customers where shopping regularly. This enable them to obtain $263MM in revenues (includes DVDXpress) for the end of the first quarter of 2010, representing a market share of approximately 20%. REDBOX MISSION Redbox’s mission is to provide clients with a very low price rental fee per day of $1 for movie rental at an accessible place, with a good selection, and the convenience of returning the DVD at any Redbox kiosk. SWOT Analysis Strengths: • PRICE – low everyday price of $1 rental movie.
As a result, the advertisers are interested in using Foxtel since it has large market share and its services can be accessed in different places. Advertisers can target specific markets using pay-television. At the same time, the interactive services offered could also be a strength to Foxtel since it is not offered by free-to-air televisions. WEAKNESSES It has been noticed that Foxtel is slow in adopting new technologies and features to differentiate its service from competitors. For example, the high-definition channels and downloadable movies are also offered by free-to-air television and other companies not in television industry.
Both of these parties felt Redbox took sales from newly released DVDs because of its $1 movie rental pricing. This caused Wal-Mart and Target to put a movie purchase limit on the amount of newly released DVDs Redbox could buy after both retail outlets discovered Redbox was purchasing movies from its stores for rental. After legal woes between Redbox and several movie studios, licensing agreements were reached that allowed Redbox to rent DVDs 28 days after the retail street release. Certain studios have agreements that allow Redbox to rent at the retail street release date. For example, Paramount Home Entertainment does not view Redbox as a threat to its newly released DVDs sales and offers its DVDs to Redbox without
Fifty percent of MLBAM’s revenues come from fans who pay $120 a season to watch games live over the Internet and the remainder is gen erated from advertising next to its online content. The business has grown into a significant revenue source for Major League Baseball, which has total revenues of about $6 billion. “They have a passionate base thatthey went after in a smartway,” says Bobby Tulsiani, analystwith the market research firm JupiterResearch. MLBAM’s strategy is enlightening for other sports franchises and, undeniably, for other Companies in the online content business. While most leagues limit what they put on the web and avoid streaming live video online out of fear that their television ratings could be hurt, MLB’s experience suggests that such concerns might be misplaced.
Research Paper-Redbox Corporation Unit 8 Procurement & Contracting BBA- July 17, 2012 The Redbox Corporation, kiosks and DVD rentals, was the brainchild of The McDonald’s Corporation. It began in 2001 as a concept of McDonald’s new business development department. Redbox’s success is a result of partnerships, a successful business model, and careful Electronic Contract Management policies. In 1984, Redbox CEO Mitch Lowe started a company called Video Droid. Lowe had been a partner with a video rental company as was weary of the high over-head costs associated with the business.
Red Box Case Study 1a. What are the chief elements of Redbox’s strategy? * Low price advantage (allows rentals for as little as $1 a day) * Strategic partnerships to raise volume (place kiosks in many high trafficked areas such as groceries or convenience stores) * Rapid expansion (have almost doubled amount of kiosks each year since 2006) * Customer experience (Redbox focuses on the customer having a fast transaction by allowing customers to obtain DVD’s under 1 minute if they were aware of which one they wanted, and returns in 20 seconds) 1b. Which of the five generic competitive strategies most closely fit the competitive approach that Redbox is taking? Low-cost provider * Redbox is using the low-cost provider strategy by offering DVD’s at roughly a 75% discount compared to their competitors * Also by placing their kiosks in areas of different industries that also use the low-cost strategy such as McDonald’s the kiosks are surrounded by their market 1c.
Redbox Case Study Redbox’s Strategy Main Elements of Redbox Strategy includes: * Attract customers with a combination of low price and convenience (strong focus on customer experience) * $1.00 per day rental price is considerably cheaper than the $4.50 rental fee charged by many movie rental outlets * The location and convenience of Redbox DVDs has considerable appeal; an estimated 150 million people per week walk within 10 feet of one of Redbox’s nearly 20,000 locations * The rental and return process was designed to be fast, efficient, and fully automated with no membership fees(200 different DVD titles are just a touch on a touch screen and swipe of a debit or credit card away and returns can be completed in 20 seconds or less at an unoccupied machine) * Gives customers the ability to go to the Redbox website and see what is in stock at nearby Redbox locations and reserve a DVD at a particular machine * Launched a Redbox iPhone app that offers the main features of the Redbox website on the iPhone and iPad * Expand rapidly the number of shopping locations with a Redbox kiosk * The parent company (Coinstar) has been aggressive in continuing to deploy additional vending machine kiosks (the company planned to install 7,000 to 8,000 new kiosks in 2010) * Plans called for capital expenditures of $115 million to $125 million for new kiosk locations * Redbox has recently negotiated arrangements to add kiosks to navy exchange stores on over 40 naval bases in the continental US and Hawaii, to 100 Schnuck Markets stores in 7 states, as well as expand its presence to more than 280 of Kun & Go’s 430+ convenience stores in 11 states * Redbox has been creating buzz among retailers interested in boosting customer traffic in their stores * Redbox has been leveraging the existing customer
Macy’s decreased its purchase of inventory and property and equipment and decrease disposition of property and equipment year by year. The cash flow changes of property and equipment are difficult to evaluate because the company opens and closes several stores each year. The cash used to capitalized software increased each year, which maybe a good investment because it could help the company generate more website sells. In 2006, Macy’s got $1,887 million from proceeds from the disposition of After Hours Formalwear and Lord & Taylor, which caused a cash inflow from
Ethical challenges also extend to those who chose to download illegal material and furthermore set up shop to sell and distribute music and movies. People have dedicated hours on his or her project and individuals can obtain it with a click of the mouse. Individuals who participate in this type of activity do not comprehend the laws of copyright material. The education has affected one’s views about the practice of downloading and copying multimedia content by highlighting the concerns surrounding plagiarism and ethical considerations of using copyrighted content of others. Education also teaches one about the legal considerations of using other's content and negative impact of copying other's material on our ability to gain knowledge.
“On Demand,” Services offered by cable television providers might be a substitute for Netflix if they increase their movie stock list to a similar title selection. It is essential for Netflix to keep up with the continually changing technology sector in order to sustain its success. (Amematekpo et al, 2011). c) Entry of New Competitors Netflix have to keep on maintaining the rising popularity of e-commerce such as an improvement and enhancing their inventory of stream movies with raise their HD streaming inventory. If this attempt is deferred, more suitable earnings of renting movies will take over such as “On Demand”.