People talk about zero interest rate phenomenons and this seems to be like another case. Lots of companies making bad decisions right before the interest rates went up. Wonder how many more bankruptcies we'll see in the next year and a half.
I'd never heard of this deal but wow, what a blunder. They merged with Redbox in 2022, assuming $350m in debts and taking over their 27000 vending machines. Since then they managed to dig that hole to a cool billion dollars. Insane that anyone thought DVD vending machines was a great idea in 2022.
I think there is a market for them. Think of the many people who still have terrible internet, with no hope for improvement. Getting a weekend movie for significantly cheaper than a theater experience is going to make financial sense.
Even if you have streaming subscription(s) you have to break out your abacus to determine if your service(s) have rights to the movie this month.
That being said, I have no idea what are their expenses. On the surface, it feels like they should have low costs, so I might be making wild assumptions. Or maybe there is a Bain Capital like situation behind the scenes intentionally destroying the business.,
> Think of the many people who still have terrible internet, with no hope for improvement.
Umm, I'm thinking, but the best I can come up with:
1. Rural/extremely out-of-the-way locations. Which means that locating a Redbox that is profitable is going to be extremely difficult because by definition you're in low-density areas.
2. Extremely poor people. Even most lower class people have cell phones these days where you can watch video, so the number of people in reasonably dense areas who can't afford broadband is going to be very low.
I do think the "multiple subscription services" issue is a valid point, but in general I think that most Redbox users are likely just slow adopters, similar to folks with landlines. The problem is that customer base slowly but surely goes away.
The local Redbox machines here seem to do steady business. I see people using them almost every time I get groceries.
Rural people who can't get internet at home likely can't get good cell service at home either. You only have to be a few miles off of the main roads before service degrades rapidly.
Also, the unbanked. People who have money but bad or no credit.
But all that said, while it might still be possible to make some money with DVD rental vending in 2024, but it's not a growth business at all.
I think the other comments still hold,
Just because there are customers, it doesn't mean that you can make profit from them.
Not sure what their margins are, but someone in an older comment said that Redboxes require foot traffic of 10k+. These things seem to require at a least weekly visits, restock, etc.
Also been awhile since I have seen a Redbox, but do they take cash? I thought they were Credit Cards only.
I have good internet and I'm not poor, but I don't do streaming services. That whole scene is just more hassle than it's worth to me. I also rarely use RedBox (but I do occasionally), so I am probably an oddball.
You're mistaken. No offense, but I think maybe you haven't been out and about much, or (reasonably!) haven't been paying attention to little local details when you have been.
Like coin exchangers and lottery scratcher machines, Redbox kiosks exist pretty much wherever the bulk of a community buys stuff for their fridge: supermarket, dollar store, convenience store, etc.
They're extremely well distributed.
And until Starlink, which is new and expensive and unfamiliar, many more (North American) communities than you think did not offer home broadband that was suitable for reliable streaming. Service was still traditional satellite, weak DSL, and maybe 3G in many places.
Plus, what made Redbox appealing to many was that you could spend a few dollars for a familiar, popular film when you had a few dollars to spare instead of committing to a whole bunch of recurring subscriptions just to hope that the title you want would eventually come up.
Certainy, the business model as a whole is becoming increasingly strained, but it continues to serve consumer needs that still aren't serviced vert well by anybody else. It's a sort of crossover point, but if the company collapses instead of restructures, it's going to disappoint and frustrate quite a lot of people.
I think you may have misunderstood my comment. I was not at all saying that people and places without high speed Internet don't exist. I was saying that the people and places that only have poor Internet services (poor people and rural areas) are also the people and places for which building a profitable Redbox distribution channel is most difficult, if not impossible given this bankruptcy news.
It's funny you go into details about how used these things are in response to an article about the company going bankrupt. Clearly you have something figured out that they don't. Maybe there's an opportunity for you.
Huh? A busines becoming unsustainable or unprofitable is completely different than its products having been entirely unused. My comment even noted that they seem to be at or beyond some crossover point in viability.
They had as many as 42,000 kiosks. Tens of thousanda remain. They are used every day. Yet the future of the company looks bleak and the finances are in crisis. All those things can be true at once.
Part of the problem is that public libraries also generally lend DVDs et al for free.
If your local library is well funded, most new titles appear on shelves pretty quickly after release.
The target demographics of people who can't afford or for whom internet is totally unavailable for streaming are much better served by their public library. It's generally funded by your city, county, or property taxes and pretty much any resident of the locality gets free access.
That leaves extremely rural locations as a target for Redbox, which is generally a pretty small market.
This may be a case of "there's a business there, but it's not this business". You can always take a sensible business and turn it into selling $1 for $0.75 and go deeper and deeper into debt while buying market share, while at the same time making it impossible for anyone else who wants to actually make money to compete.
(I have no idea how to turn this into any sort of law but companies really shouldn't be allowed to just dive into debt, conquer a market via selling dollar bills for 75 cents, then collapse into a puff of compounded interest and massive losses and destroy the entire segment they are in as they collapse. I suppose just not having interest rates at effectively 0 will likely do the trick eventually.)
The problem solves itself until venture capital arrives and decides that pouring $2 billion into a market that doesn’t make economic sense is the sane thing to do just in case one day it becomes a $200 billion market.
It doesn't need to be a law, if the government steps out of the way the natural laws will shut the business down. But if the government bails them out then I guess we don't believe in natural laws.
Terrible internet? You watch a movie once a month max or less? You find it less confusing the the stream service mess where movies are constantly moving around and the interface changes all the time so you can never find what you were looking for once you do finally learn it?
For one, Redbox has (or had) coupons and codes and stuff like that all the time where you can get free/reduced nights. They used to be one of the T-Mobile Tuesdays offers quite often, for example.
For another, it used to be the case that Redbox would have things well before you could stream them, or when they could only be streamed expensively. Various waves of the distributors making it more annoying for Redbox to buy the discs, pushing things to their own streaming services very early, and just generally the downturn of physical video media all blunted those positives though.
I used to use it semi-regularly for Blu-rays even not that long ago, but the kiosks around me have started to go away and the available selection and timing of releases is way worse than it used to be.
They really just have everything working against them: the ongoing huge shift to streaming, the pandemic and strikes putting holes in the release calendar, Marvel and DC both stumbling, interest rates...
That's presumptive on having Internet at all, but even so people make poor economic decisions all the time. Think of title loan and paycheck loan places, grocery shopping at the dollar store. You get the idea. And the fact that at times movies can be released to dvd before they're released to streaming. For that matter even if it's available to stream it may not be available to stream on your service. Does you no good that Suits is currently on Netflix if you're a Hulu subscriber.
If Bob watches one movie a month, you won’t have a good business. If there are thousands of Bobs in one area, you can do just fine.
Meanwhile no streaming service will ever get Bob to sign up.
As an silly example: no one rents carpet cleaners every weekend, you can still rent carpet cleaning machines. There is enough demand in aggregate for it to be viable.
That "if" is doing a ton of work there, and even if we grant it, you've got physical costs that scale with the number of locations, which doesn't apply to streaming.
True. But it’s not like Redbox is launching the kiosks today, that’s already sunk cost because they’ve made them all. Sure they need repair and stuff but they’re basically vending machines so I’m guessing there’s somewhat sturdy. And loading new movies in/taking old ones out could be done by the employees of the stores they are located in as part of the placement agreement.
Could you start a Redbox from scratch? I kind of doubt it. I think the costs would overwhelm you. But that’s not the position they’re in.
I’m not saying you’re going to become a fortune 500 company on the business model. But I think there’s enough for a real business to survive there, depending on the areas where you place the kiosks.
However Redbox has history and the agreements may not be as favorable to them as they would need to keep operating, or they may have a lot more debt than necessary.
There are a lot of Bobs out there though. It’s not a big theoretical.
