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The Lowe-down on Redbox
August 12, 2009
When a Redbox rep called last night to ask if I'd want 15 minutes this morning with Mitch Lowe, the veteran (Video Droid, Netflix) video retailer who runs Redbox as its president, I of course said yes. Little did I know that Redbox's federal antitrust suit against Fox would be announced before the interview.
Lowe has got to be one of the most intriguing people in the entertainment industry right now, given the hefty deals Redbox is signing with some studios (Sony, Lionsgate), and the legal papers it is serving others (Fox, Universal).
In no particular order, here are some of the things we talked about, in addition to the Fox case. Read about that here.
Re: The idea that Redbox's $1 rentals cannibalize sales of new DVDs:
"We attract a new customer that is not buying or renting, because of our pricepoint," says Lowe. An average of 150 million people per week walk withing 10 feet of a Redbox kiosk, he says, and often use the low-priced rentals to try a film before buying it. The more films people watch, the more they want to watch, he notes.
Re: The idea that sales of used discs generated by Redbox cannibalize sales of new DVDs:
A "minimum of our locations" sell used discs, says Lowe, estimating that just 1% to 3% of the company's revenue comes from used disc sales. For the studios with which Redbox has distribution deals, like Sony and Lionsgate, "we don't sell a single disc from those studios used," Lowe says.
Re: The potential size of the rental kiosk market
Redbox is expected to have kiosks in 20,000 or more locations by the end of the year. It opens an average of one kiosk per hour 24/7. And Blockbuster, in combination with ATM maker NCR, is poised to come on strong with thousands more branded kiosks. At some point, there's going to be shortage of suitable retail locations for kiosks, no?
According to Lowe, Salt Lake City and Houston are Redbox's most dense markets, with one kiosk for every 3,000 people, give or take. Using that ratio, the U.S. could possibly support about 60,000 kiosks, Lowe said. (Which is not to say that 60,000 is a goal for Redbox.)
Posted by Marcy Magiera on August 12, 2009 | Comments (2)
