DVD rental kiosk leader looks to compete with Netflix in online rentals.
OAKBROOK TERRACE, IL - Redbox, whose ubiquitous DVD kiosks and $1-a-day rental price has earned the company the distinction as the fastest-growing U.S. video retailer, may use an online service to stay competitive with Netflix and other online video rental services, Bloomberg reports.
The company, part of Coinstar Inc., could be looking to an online service as a means of expanding its video library beyond the 200 or so titles housed in each of its 24,000 DVD kiosks.
"The way we look at it is, how can it help us deliver to our customers things we can??t do in our kiosks?" said Redbox president Mitch Lowe. "What role might it play in expanding our selection?"
The company is expected to outline its plans in October as to how it can narrow the gap with Netflix, which offers more than 100,000 titles by mail and 20,000 older films online.
Convenience and low price have enabled Redbox to thrive, with sales increasing 70 percent in the first quarter. At the same time, the company acknowledges losing business to consumers who go to Netflix for older titles. It also faces competition from Apple and Best Buy, which sell movie downloads, as well as Walmart and Sears.
North American DVD purchases have declined the past three years, though rentals are expanding and expected to increase an average of 2.7 percent to $9.97 billion by 2014, which spells good news for Redbox, Lowe said.
Redbox generated sales of $263 million in the first quarter, and the company is testing video games and Blu-ray in some markets.
"The disc business has a great future," Lowe said. "Especially with Blu-ray coming out. It extends the life."
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