Redbox: Disruptive Innovation in DVD Rentals

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Case Details:

Case Code : BSTR359
Case Length : 14 Pages
Period : 2002-2009
Pub Date : 2010
Teaching Note :Not Available
Organization : Redbox Automated Retail / Redbox Automated LLC
Industry : DVD Rentals / Entertainment
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction Contd...

Under the trial license program, Paramount would provide its DVDs to Redbox on the street date itself.

The trial period was to be till the end of 2009, during which time Paramount would analyze the rental information provided by Redbox to decide, whether to continue the arrangement until 2014.

Paramount would receive US$ 575 million and 20% kiosk space, if the deal was extended. If the deal did not materialize, Redbox undertook to remove and destroy Paramount DVDs from their kiosks, by the end of the year.

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Redbox was founded in 2002 and was owned by Coinstar Inc. (Coinstar)5. Using patented technology, Redbox provided its customers a wide selection of movies, an online reservation option and the facility to rent a DVD from one kiosk and return it to another.

By August 2009, it had a presence at over 17,500 locations in retail stores and restaurants across the US, providing tough competition to traditional 'brick-and-mortar' stores and online DVD rental services. Redbox's earnings increased during the recession in the US, with more people opting to rent DVDs, rather than purchase them...

 Excerpts >>

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5] Coinstar, established in 1992, mainly operates coin-counting kiosks throughout the US. From 2004 onwards, it acquired several businesses, including skill crane machines, money transfer, and self-service DVD rental businesses.

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