In an effort to raise profits, Redbox has been quietly raising prices beyond the normal $1 a night movie rentals in their thousands of little movie kiosks. But, the price increases have been inconsistently rising though. In one Portland, Oregon McDonalds Redbox location, the price is just $1.15. In other parts of the country such as Albuquerque, New Mexico, customers are now paying $1.50 a night. In the city of Harrisburg, Pennsylvania, customers are now paying a high water mark of $2 a night for the first night, or double what Redbox was charging. Redbox is counting on consumers to ignore the higher prices and instead focus on the convenience of being able to rent new release movies.
Recently, the CEO of Coinstar(those kiosk machines that let you exchange coins for a fee) confirmed that the new software that was installed in Redbox machines would allow for variable pricing levels. So consumers can expect to see the day of the $1 dvd rental a thing of the past.
But, Redbox has even more serious issues than just some new pricing structure to deal with. 20th Century Fox has recently taken steps to prevent Redbox from acquiring their dvds to rent from their machines. Fox wants Redbox to cut them in on some royalty payments each time a dvd is rented. Now, Warner Bros. seems to be interesting in following FOX, although Redbox has filed a lawsuit against FOX for their efforts. Apparently, there is no real legal basis for Hollywood to demand royalty checks from dvd rental businesses. However, with so many films that cost millions to produce that lose money as box office flops, Hollywood is looking to cut their business risks.
Risk cutting for Hollywood also seems to propelling Hollywood to experiment with some sort of new copy protection systems on some of their new releases as well. JACKASS 3.5 and NO STRINGS ATTACHED both were released on dvd in the last few days with a new copy protection system included to prevent consumers from making additional backup copies of movies they purchased and own to bring with them on vacation, much like they would do with their own cd collection. However, some consumers will likely be angry that they have to carry around the more bulky dvd packaging if they want to bring along movies on the vacation to play in their portable dvd players or in car dvd systems. Somehow, Hollywood thinks that if consumers make up backup copies of dvds to leave at the beach cabin or use on vacation, they are losing revenues, thinking that consumers will buy two copies of a movie at $20 bucks each. But, that theory seems to be unproven. Regardless, dvds are an important revenue stream for Hollywood and the studios are looking to shore up those risk revenues, even if it means pissing off many consumers who purchase their products.
But, Hollywood is always mindful of what happened to MGM. The once mighty film giant got caught in the middle of too many unprofitable projects and faced bankruptcy. Many new projects such as the latest James Bond film got shelved until MGM could resolve their financial woes through new investors.
Consumers need Hollywood to do well in order to continue to produce great new projects which cost mega-millions of dollars to produce. But, Hollywood sometimes risks creating a consumer backlash when they push some issues too far. Now, FOX finds themselves in court with a lawsuit from Redbox as one good example.
Update: A spokesperson for Redbox reached out to Wizbang Pop! to add the following:
The daily Redbox rental charge is $1 a day for DVDs, $1.50 a day for Blu-ray Discs and $2.00 a day for video games. Redbox is currently testing alternative prices on DVDs in six markets to understand the impact of price on our business. At this time, no plans have been made to expand the test or to change pricing permanently.