Redbox Case Analysis

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Case Analysis: Redbox

Stefan Marroquin
31 January 2012
Strategic Management
Dr. Mark S. Poulos

Introduction
Redbox is a leading provider of movie and game rentals in the Nation. Redbox offers self-service DVD rentals through over 22,400 kiosks throughout the United States, Puerto Rico, and the United Kingdom. (McGraw 20) In 2004 Redbox began spreading automated vending machine kiosks containing by and large new release movie DVD’s in high traffic shopping locations. Its products and operations include Kiosk DVD rental, online disc rental reservation, no late fee, recently released movies, and video game rental. (Hoovers) In February 2009, Coinstar Inc., who is also a leading provider of money transfer services and self-service coin-counting kiosks, purchased full ownership interest in Redbox Automated Retail LLC., (McGraw 20) In 2009, Redbox made up 67% of Coinstars revenue and now holds 27.9% of the DVD rental market share (Coinstar Analysis). Executive Summary

This analysis will examine the business model and financial position of Coinstars subsidiary company, Redbox. It will focus on the current and expected future situation, as well as provide recommendations for the critical challenges of continued growth of the company’s market share in the DVD rental business. The DVD rental industry is rapidly changing due to the continuing advancement in developing video technology. For that reason, the recommendations include both the continue development and expansion of DVD rental kiosks as well as developing a web based service to continue to compete in the highly competitive movie rental industry. The recommended actions are as follows: * Increase the number and distribution of DVD rental kiosks through creating strategic partnerships * Develop a web-based service to offer customers the ability to watch movies from the internet * Strengthen partner relationships

Mission/ Vision Statement
Redbox shares every movie enthusiast passion in having a convenient way to access new movie titles at a very low price. Redbox is driven to be a world class organization that delivers access to hundreds of DVD movie and game titles to its customers by incorporating technologies and generates a return to the shareholders in the excess in the cost of capital. Redbox uses automated retail kiosk that provides customers with access to DVD and game rentals 24 hours a day, providing unmatched services in the movie rental industry. General Environment Analysis (External Analysis)

There are many different factors in the environment that influence Redbox Automated Retail. These factors include: general business ethics, United States copyright laws, the economic recession, unemployment, increased consumer debt levels, declining consumer confidence and spending, new technological advances, natural disasters, and content acquisition and license agreements. Although the previously listed factors each hold a certain degree of importance, the most relevant factors include new technological advances, content acquisition, and license agreements. The advancement in technology, such as digital access to movies via the internet, allows customers the convenience to access films directly from their home which weakens the consumer demand for DVD’s. Furthermore, content acquisition and licensing arrangements restrict the amount of titles that are available to Redbox resulting in litigation battles with large movie studios.

Industry Analysis
There are many important components in the movie rental industry. The structure of the industry is one that consists of a large number of big companies. Redbox competes in a highly competitive industry that is quickly advancing. Large competing companies such as Blockbuster and Netflix offer services through store chains and e-commerce websites. It would not be feasible for new smaller companies to enter the market. Redbox is no longer the only company providing automated kiosks services to...
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