Redbox and Netflix: Short-term or long-term threat?

Today’s Retail Wire discussion centers on the opportunity for Redbox and other DVD “kiosks” to steal market share from Netflix. I agree this is a short-term issue but I think the discussion misses the real point:

Kiosks have barely reached a saturation point and provide plenty of short-term competition for Netflix (not to mention Blockbuster) in satisfying consumers’ demand for convenience. However, the Netflix formula offers not only convenience (if not instant gratification) but also breadth of assortment. If you’re looking for a DVD other than a best-seller, your choices on Redbox are limited and the $1 rental fee only works if you are willing to watch that DVD right away.

More relevant long-term is the switch from DVD to digital delivery of movies and other entertainment. Reed Hastings of Netflix was profiled last week in the Wall Street Journal, and it makes important reading: The paradigm shift of digital delivery is what keeps him awake at night, because he knows it will upend the business model of Netflix, Redbox and Blockbuster over the next five years.


1 Response to “Redbox and Netflix: Short-term or long-term threat?”

  1. 1 Ted Hurlbut June 30, 2009 at 6:04 pm

    I agree with your analysis. In the short-term Redbox provides serious competition to Netflix in new releases, but Netflix will continue to do fine with the Long Tail of titles.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s


%d bloggers like this: