The Power Of In-Between Technology
Why Redbox is the biggest movie-rental company you’ve never heard of? Its secret: the power of in-between technology.
Redbox — founded in 2002 as a division of McDonald’s and purchased by Coinstar this year — runs 15,000 machines in stores across the country and plans to have about 20,000 in place by the end of the year. Reed Hastings, founder of Netflix, the innovative darling of the movie-rental business, has called Redbox one of his most challenging rivals. “It’s really scary,” Hastings told The Hollywood Reporter in March.
Redbox is convenient and it’s cheap, but the company’s fortunes also rest on a more sophisticated calculation about the marketplace. Ask any entertainment bigwig where the movie-rental business is going and you’ll hear one thing: digital streaming. Amazon, Apple, Netflix, the cable companies, and many startups are gearing up to send every movie to your home on demand.
But Hollywood’s byzantine licensing structure precludes that from happening anytime soon. Redbox has positioned itself as the perfect in-between technology — the next best thing to on demand. It’s winning by being in more places than Blockbuster and faster than Netflix.
What’s surprising, though, is how much wizardry goes into making Redbox work. Each machine is connected to the Internet via DSL or a 3G cellular modem. This lets customers browse and reserve movies at their local Redbox through the Web, and return movies they rent from one Redbox to any other.
Each machine packs a sophisticated inventory-management system that determines how many copies of different new titles to order based on past performance of similar movies at that location. The kiosks send their inventory orders up to the mother ship every week, and Redbox’s technicians fan out to each kiosk to stock it with new DVDs.
“That’s the most interesting part — where technology meets old-fashioned field distribution,” Lowe says.
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Photo by Redbox.
RedHotFranchises on July 3rd, 2009 3:14 am
Redbox is great! pretty cheap for $1.00 per night, only bad thing about it is having to return it in a long queue up line. I was thinking more about a 3D Virtual Online Theater, now that would be very interesting.
Jaclyn on July 6th, 2009 8:26 am
That does sound like a pretty decent invention. However, I feel that netflix (as i’m a subscriber of netflix) is far better. You never have to leave your home to rent or return movies (well, you don’t have to go farther than your mailbox), not to mention there is no daily or nightly fee for having their movies, it’s one fee for the entire month and depending on the package you choose you get a bunch of movies. Like with mine, i signed up for the basic package, so i get one movie out at a time. I get it on say monday, watch it, put it back in the mailbox tuesday morning and by wednesday morning i have my next new movie. You can even pre-order movies to go on a “waiting list” that haven’t even come out on dvd yet.
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