Rental Giant Redbox Raising Rates Up to 50 Percent

Photo courtesy of geek.com

Over the past couple of years, Redbox kiosks have popped up inside and outside grocery markets, pharmacies, and shopping centers across the country. The meteoric rise of the company, which rents video games and movies on DVD, has been a major part of the reason why most mom and pop and chain video stores have shuttered their doors in recent years.

Redbox, which operates nearly 44,000 in-store rental stations, announced earlier this month plans to increase DVD rental prices “in an effort to wring more revenue from the shrinking audience” that prefers discs as opposed to streaming movies online. Since December 2, 2014, the rental rate for a DVD will has risen from $1.20 per day to $1.50 per day. For Blu-Ray discs, rates are jumping 33 percent, from $1.50 per day to $2. Gamers, however, will be hit the hardest. Video games, which currently rent for $2 per day, will now rent for $3 per day, a 50 percent increase.

As more consumers move to more convenient options such as Netflix’s $9-per-month online video service and video-on-demand packages offered by cable and satellite television providers, Redbox has seen a decline in the number of discs rented from its kiosks and hopes the rate hike will offset lost revenues. One advantage Redbox has over its competition is that recently released movies are rarely licensed to Netflix and typically cost four to five times more through video-on-demand options.

Redbox, which last raised DVD prices three years ago, has seen earnings plunge 59 percent during the first nine months of the year as sales at Redbox kiosks open for the past year dropped 6 percent, according to a story at ABC News. Realizing a shift away from DVDs, Redbox’s parent company Outerwall Inc. attempted to compete online but pulled out of a joint venture with Verizon Communications but not before pouring over $75 million into the project.