CONSUMED BY MEDIA

Who’s making anything on a buck? Redbox is!

Posted in DVD, Netflix, Redbox, rentals by Diane on August 20, 2009

redboxWith all due respect to my former editor Michael Speier, had to laugh when I read this plaintive studio remark in his Redbox story:

“The comfortable price point is more in the video-on-demand mode or the current Netflix and Blockbuster model,” a studio exec told The Wrap. “Charging $3.99 for a title — and then being involved with revenue sharing. There’s money to be made that way. Who’s making anything on $1?”

The answer, of course, is that Redbox is making money. Lots of it. The kiosk company has hit upon a business model that consumers really like in these tough economic times, and its growth has exploded accordingly.

OF COURSE the studios would prefer that they get a cut of the each rental transaction, as they do with Netflix and Blockbuster under revenue sharing terms, or VOD transactions through iTunes. Studios are making money on each disc Redbox buys through a distributor or retailer; they’re just missing out on coin if consumers choose to rent through Redbox rather than Blockbuster.

More studio observations in The Wrap story here

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