Start-up companies who suddenly find themselves taking off are in an
interesting position: maintain the status quo, or attempt to squeeze
more out of their business model. Redbox is one of those services, and
with 25,000 DVD kiosks now in service around America, things are
reaching a critical mass. Thus far, the company has largely generated
support by offering nightly DVD rentals at just $1/night, with online
reservations making things even easier for consumers.
Recently, we heard that Redbox
was considering a low-cost video
service, something that would more directly compete with
Netflix's wildly popular "Watch Instantly" streaming feature, which is
now available on Nintendo's Wii, Microsoft's Xbox 360 and Sony's PS3.
But implementing such a service would be costly, and with people
renting $1 DVDs at a rapid pace, it makes sense to think that Redbox
might want to test the waters on the more expensive end somewhat.
According to a company representative, Redbox is currently "testing
out" higher price points in various cities, with nightly rates ranging
from $1.15 to $1.25 instead of the typical $1. There's obviously no
mention of how long these "test rates" will simply be "tests," and if
demand ceases to slow even at the higher price, you can almost bet that
Redbox will roll these higher prices out to other cities.
Is the end of the $1/night DVD rental upon us? We sure hope not, but we
wouldn't be surprised. The $1/night entry rate was a great way to break
out in a crowded market place, but the time may finally be right to
price things a bit higher if demand continues to skyrocket. Get the
cheap ones while they last!