Redbox, the omnipresent DVD rental kiosks that dot the landscape of the United States, made a couple of large announcements during their quarterly financial call. One is sure to disappoint users of the service, and the other should be making Netflix CEO Reed Hastings a bit nervous.
First, for the bad news. It seems that the recent change in the costs associated with accepting debit cards has gone up, and to cover this extra expense the rental fees on standard definition DVDs will rise from $1 a night to $1.20. CEO Paul Davis said that the majority of their customers use debit cards which has increased their expenses, but that does make you wonder why the rental prices for Blu-ray and games will hold at a $1.50 and $2.00 respectively. I’m not quite certain why the price must increase on regular DVDs to cover this new fee while the other proucts can somehow absorb those expenses, but that’s the story the company is going with.
As for the potentially bad news for Netflix, Mr. Davis stated that announcing a streaming video service before the end of this year is “a top priority for the company.” Considering the current state of Netflix having lost 800,000 subscribers in the last quarter, another trusted brand name entering the streaming arena could be a major threat to their sustainability. There may be no better time for the kiosk-based company to enter into this fight, and with its existing relationships with all of the major studios, it shouldn’t be difficult for them to secure the needed licenses to get the project off the ground. Potentially the largest hurdle will be getting the needed software installed on to devices which is where Netflix has a major head start over anyone wishing to enter the market.
Only time will tell how the price hike will impact DVD rentals, and as for a streaming service? Netflix better be looking over its shoulder.
Would you try a streaming video service offered by Redbox?