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Summary:

Redbox President Mitch Lowe joins us for this week’s Five Questions With…, and describes his frustrations with the industry’s aversion to change as well as his abiding respect for the Hollywood studio system — including the works of actor Johnny Depp.

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Redbox’s entrance into the world of media distribution led to both interest and lawsuits from the major studios, but its new approach to DVD rentals may just be only one step for the company as its business evolves. So for today’s Five Questions, we asked president Mitch Lowe to reveal how Redbox is trying to keep the industry evolving, his dislike of the word “disruptive” and his not-so-secret love for Johnny Depp.

1. What’s the one big issue/law/attitude/restriction that you think is holding back the industry?

Lack of adaptation to change. Over many decades, Hollywood has become an institution. As such, it is somewhat slow to change. But just like the music industry, we are beginning to see change within the motion picture industry, which has been largely driven by consumer demand, innovative business models, and new technologies. At Redbox, we believe change is imperative to keep the industry vital and relevant, and we’re doing a number of things to ensure that the company adapts to change. In addition to surveying consumers on an ongoing basis, we’re testing video games and Blu-ray rentals to gauge consumer demand, because while we believe in the viability of the DVD for many years to come, we also recognize that consumer preference will continue to evolve. Our strategy is to continue building on the relationships we’ve established with millions of consumers nationwide.

2. What industry buzzword do you never want to hear again?

Disruptive. Redbox has been referred to as a disruptive technology and in some ways this is very flattering as it says that we’re not happy with the status quo -– which is true -– we’re constantly looking at new ways to innovate and improve the consumer experience. When we think about how we’re helping consumers who love movies have access to more entertainment through our low-cost model, we don’t think of ourselves as disruptive at all. So while some may call us disruptive, we’d prefer to think of ourselves as innovative with an end goal of serving consumers.

3. If someone gave you 50 million to invest in a company in this space, which one would it be? (Mentioning your own doesn’t count.)

The studios. This may sound odd as we already channel millions of dollars to the studios by purchasing their content and inspiring consumers to try before they buy. However, at the end of the day, regardless of how people consume entertainment, they want a quality product. When the studios are successful and producing great quality, entertaining movies, we’re all successful.

4. What was the last video (that you weren’t personally involved with) that you liked enough to spread to others?

Alice in Wonderland featuring Johnny Depp for a variety of reasons, including the tremendous cinematography, classic story, amazing 3-D effects and stellar cast. It is entertaining in every way. [Editor's note: This question is technically meant to refer to a viral video or web-based content in general, but because Redbox's focus is on physical media we'll allow it.]

5. WILD CARD: Redbox’s business is currently built on distributing physical media, which many people feel to be an increasingly archaic medium. What makes you so confident in its future viability? And how might a rumored streaming service play into that?

Redbox firmly believes in the viability and profitability of DVDs. With the move to content delivery mediums such as Blu-ray and 3D, Redbox has the opportunity to play a pivotal role in meeting the entertainment needs of consumers for years to come. Our national network of more than 21,000 locations, proven technology and expansive customer base leave us well-positioned to execute against developing technologies if and when data suggests customer preference is moving in that direction.

Regarding digital/streaming, we are looking at a number of potential solutions that would fit with the value and convenience proposition of Redbox, and are currently surveying consumers to better understand their interest in our potential offering.

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  1. Give me a streaming service with all the new movies the same day they are released on DVD, for the same $1 and I will be very happy!

  2. Mitch still doesn’t get it. He’s tone deaf or just not that smart. He’s disruptive not because he’s doing something innovative or technologically ground breaking. He’s attacking the studio’s intrinsic value of a purchased DVD at $19. Research proves consumers do not behave in the “rent it, like it, buy it” he argues. We as consumers view a movie in theaters (maybe) and/or on video once or twice – that’s it. Studios spend a lot on marketing to get consumers to buy DVDs/Blu-rays at $15+. If you want to rent DVDs for a buck – good for you and me as a consumer but you’ll need to wait your time after the studio’s have tried to sell them at $15+. And you call this “slow to innovate”? Wow, it’s just common sense. Dollar movie theaters get films 2 months from the theatrical opening – your lucky Warner only pushed you back 28 days.

  3. I find it interesting that European disc sales (Blu-ray and DVD) are up 2.3% in the first quarter of the year, according to DEGE: The Digital Entertainment Group Europe, while in the United States sales were down 11% in Q1, according to DEG: The Digital Entertainment Group.

    That can mean only one thing: Disc rentals are a drag on sellthrough in the United States. European’s aren’t subject to the same First Sale Doctrine that had allowed (up until 28-day window agreements with Redbox and Netflix) rental stores in the United States to rent titles at the same time they are available at sellthrough.

    Obviously, consumers in the United States are turning to $1 Redbox rentals and cheap subscriptions at Netflix to fill their need for movie entertainment — otherwise, disc sales in the United States, as they were in Europe, would also be up.

    The European numbers make the U.S. market more clear. Consumers are renting (at extremely low prices) instead of buying because they can. Without a robust rental market, Europeans turned to buying discs more often.

    There’s a method to the rental window madness in the United States. Studios are merely asking consumers to pay more, as they do in Europe, to see high-quality releases. The evidence for the U.S. studio move is in the numbers.

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  7. I am having difficulty when I ask the redbox.com to find a location near me. When I enter the location, and I press search. It doesn’t move. I tried it several times, until I was tired. Can you help me figure out how to reserve a video online.
    Thanks.

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