40,000 kiosks. That’s how many Redbox locations are waiting, right now, to dispense DVDs into the hands of eager movie buffs. That’s one major market, and a recent interview with Redbox CEO Galen Smith shows that Redbox isn’t planning to let that market stop at just picking up and dropping off DVDs.
No, according to Smith, Redbox is out to make a strategy work that even Netflix has mostly given up on: bringing together streaming and disc rentals into one place.
Smith detailed the plan in an already-big week for Redbox. This is the week that Redbox became a publicly-traded company, with shares available for purchase on NASDAQ. With such a listing comes a lot more scrutiny as analysts start going over records with a collection of fine-toothed combs, looking to make recommendations about the purchase of Redbox stock.
Smith noted that the plan isn’t exactly new. Redbox has already had a streaming app in place since last December. About the only platform that won’t allow access to the Redbox streaming app is Amazon Fire TV, and Redbox is working frantically to bring that last holdout into the fold. Redbox’s customers, according to Smith, are generally “later adopters” of technology, for whom the “full switch to digital” is still a work in progress, if at all.
So right now, Redbox is regarding its streaming capabilities as more of a value-add than a potential replacement for discs. The Redbox app boasts not only ad-supported content, but also transactional content — the kind you pay for upfront, as well as more than 120 channels of live television.
If that sounds to you a lot like other streaming video platforms in the market, like Crackle or Tubi, then you’re not alone in that assessment. Smith notes that, while he’s well aware of the existence of these platforms, his customer base, largely, is not. Therefore, he revealed, it is a golden opportunity for Redbox to branch out and become the type of service — like a Crackle or Tubi — for customers who have never actually heard of it. Moreover, Smith says, he wants Redbox to include movies, something that he says those services do not do as well.
Redbox is already starting to build its partnership base. It has already established deals with Lionsgate, Legendary Entertainment, and several other production houses to bring more content to the service. It has even set up a distribution deal with the producers of the “John Wick” franchise to bring 12 original action movies to the service.
All this is an excellent idea, but Smith seems to either ignore or be largely unaware of one key point: the digital divide. One of the biggest reasons that Redbox has all those kiosks isn’t because people just don’t want streaming. It’s because streaming is unavailable for large numbers of those people. A Pew Research study from June points out that, while broadband internet access — which is vital for streaming video — is becoming increasingly available, there are still large portions of the population who do not have that type of access. The Pew study noted that the percentage of Americans with broadband subscriptions has hit 77 percent, which is up from the 2019 figure of 73 percent. Yet, despite this data, still one-in-four Americans do not have access to broadband.
What’s more, Redbox is embarking on a strategy that Netflix has already been running for years, and has mostly abandoned. Netflix’s DVD supply was once one of the largest private film archives on the planet, fully 100,000 DVDs strong. Now? It is closer to 4,000.
With Netflix still sending DVDs to as many as 2.7 million customers in 2019 through its dvd.netflix.com operation, it is clear there remains at least some interest. Netflix ran both DVD and streaming operations concurrently for years; it started streaming in 2007. It didn’t even spin off the DVD operations until 2011.
Streaming services have long been at a key disadvantage to disc-based operations: rights issues. Ever notice how a streaming service will have titles leave the service? That’s not the case with disc-based operations, and that’s part of what kept video stores open as long as they were. Once the video store had a copy of “Police Academy,” they had it until it broke or was stolen.
Still, Redbox has an exciting idea afoot. With the digital divide slowly closing thanks to things like 4G LTE home internet and Elon Musk’s Starlink system, more and more disc users will take an interest in streaming too. Yet, since there’s still an interest in discs beyond streaming — especially thanks to rights issues — Redbox will be ready to cover that front, also. That versatility may make Redbox a serious competitor in a field that’s increasingly packed with options.
Redbox
Redbox is a free ad-supported video streaming service with dozens of live streaming channels and on demand movies. Users can also rent or buy movies through the platform.