Cord-Cutting and Cloud: Why Does Redbox Defy the Trends?
While technology trends toward cord-cutting, cloud-based technology, digital copies, and everything — files, software, and even hardware elements — existing beyond consumers’ physical reach, Redbox seems to be defying the trends and succeedingly so. The Illinois-based Outerwall (NASDAQ:OUTR) subsidiary hasn’t even come close to giving up on its ventures centered around real, palpable, hard-copies of movies and video games that it makes available for rent through its Redbox kiosks.
People may move in droves to Netflix (NASDAQ:NFLX) and away from cable providers so they can stream movies and binge watch TV shows whenever they want without any commercials, but Redbox is proving plenty of people still go for renting a disc and taking it home. With 44,000 kiosks in 36,000 locations as of early June, Redbox accounted for half of the DVD rental market, according to Outerwall CFO Galen C. Smith, reports Variety. On top of that, 38 percent of all movie rentals came through Redbox during its fourth-quarter, and that includes Video-on-Demand rentals.
The company offers its own streaming service, Redbox Instant, to fulfill the competitive need when faced with all the VOD services from cable operators and services like Netflix, Hulu, and Amazon Instant Video. It may also prove a valuable asset in the near future, as analysis firm PwC estimated home entertainment revenue would fall from $12.2 billion in 2013 to $8.7 billion in 2018 in the category of physical copies that Redbox occupies, according to Variety. Still, it has particular value to consumers that other services might not, and it even values that fact that it serves physical copies instead of just digital ones.