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Summary:

If Redbox is set to destroy the Hollywood with $1-per-night DVD rentals, what’ll happen if Big Box DVD kiosks start appearing around the country, charging just 6 cents an hour? We could find out if Big Box parent Mosquito Productions is able to expand its kiosk […]

Big Box DVD kiosk

Big Box DVD kiosk

If Redbox is set to destroy the Hollywood with $1-per-night DVD rentals, what’ll happen if Big Box DVD kiosks start appearing around the country, charging just 6 cents an hour? We could find out if Big Box parent Mosquito Productions is able to expand its kiosk DVD rental business.

A recent study posited that low-cost DVD rentals from Redbox and others cost the entertainment industry upwards of $1 billion per year, but John Buchmann, owner of Mosquito Productions, wrote in an email that his company is “not big enough for Hollywood to care about at this point.”

Even so, he argues that the opportunity for businesses like Big Box DVD and Redbox are a result of Hollywood not keeping tabs on retailers.

“Wal-Mart started selling DVDs at a loss to get their feet in the door well before Redbox had any sort of foothold. Since there was only a $7-$10 difference between renting and buying, it was inevitable that the rental prices would go down,” Buchmann wrote. “Hollywood simply hasn’t protected their product on the retail end for years now, and cheap rental services are an inevitable result of that.”

Unlike Redbox, which charges users $1 per day for DVD rentals from its kiosks, the Big Box DVD kiosks rent new releases for 6 cents an hour, catalog films for 4 cents an hour, and Blu-ray discs for 9 cents an hour. With prices so low, users could (theoretically) watch and return a movie for less than a quarter.

But it could actually end up being more costly to rent from a Big Box kiosk than from competitor Redbox. After all, a 24-hour rental at 6 cents an hour costs $1.44 — and rental kiosks and brick-and-mortar stores alike have historically made most of their money from late fees.

Mosquito Productions says its kiosks can hold up to 15 times the number of discs that are available in competing machines from Redbox, and the Big Box DVD web site lists more than 100,000 titles available from its kiosks, and even which kiosks each title is available at.

For now, the kiosks haven’t spread very far, and are focused primarily on serving college students. The company has three locations at University of Wisconsin campuses; its fourth, most recent kiosk is located outside the company’s offices in Blaine, Minn. But the company says it is looking for new locations, specifically in the Twin Cities and western Wisconsin areas.

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  1. Just to clarify the point on Wal-Mart (the words got a little jumbled in translation, which happens to the best of us!):

    The sentence really should read, “Wal-Mart started selling DVDs at a loss to get feet in their door…” meaning that DVDs are sold at a loss to hopefully get you to pick up that microwave or t-shirt on the way out which gives them the profit they want. Hollywood has clearly allowed the devaluation of their product through large chain retailers even before Redbox existed, so it doesn’t make any sense why they should be blaming Redbox for any loss to the industry.

  2. Yup. I picked up a copy of ‘The Dark Knight’ on DVD at a Target store a couple of weeks ago for $3.99. For a big-budget film like that, which was only released last December, the DVD had to have been sold at a loss. It did get my feet in that door, though.

    That hourly rate Mosquito Productions is trying out looks pretty smart. Not only do they differentiate themselves from RedBox, but like you stated Ryan, lots of folks will get drawn in by the low hourly rate but probably end up paying more by keeping the DVD’s longer than they expect. Let’s see if the idea sticks…

    Cheers!

    Druu
    Bite Me TV

  3. New Big Box DVD Kiosks Charge Six Cents an Hour | Inside Redbox Thursday, December 10, 2009

    [...] New Tee Vee] Bookmark [...]

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