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  • bullmarket_of_2010 bullmarket_of_2010 May 12, 2010 1:38 PM Flag

    Redbox toys with higher DVD rental prices (again)

    12-May-10 12:35 pm
    Already the king of the DVD rental kiosk market, Redbox recently announced that its 25,000th kiosk has rolled off the assembly line. But even as Redbox consolidates its position and signs deals with Hollywood studios, it's again tinkering with its famous buck-a-night pricing scheme.

    Home Media Magazine reports that CoinStar-owned Redbox, which has about 24,800 DVD rental kiosks in operation, finished building its 25,000th box just last week, and it plans to roll out 7,000 to 8,000 more kiosks before the year is out. That compares with a projected 10,000 Blockbuster Express kiosks for competitor NCR.

    At the same time, Inside Redbox is reporting that Redbox users in various markets — including Miami and San Diego — are seeing prices of 15 to 50 cents over the company's magic DVD-for-a-buck formula.

    Indeed, it's true: I just checked with a Redbox spokesperson, who confirmed the latest price hikes — er, "price point tests" — and gave me the following breakdown (these increases over the nightly rate are for standard-definition DVDs, by the way, not Blu-ray rentals):

    • Modesto, Calif.: +25 cents
    • San Diego, Calif.: +25 cents
    • Spokane, Wash.: +15 cents
    • Miami/West Palm Beach, Fla.: +15 cents

    Redbox's latest round of price testing, which began this month, follows November tests in Harrisburg, Pa., and Albuquerque. In the (now concluded) Harrisburg test, Redbox customers were charged $2 for the first night and a buck a night thereafter; in Albuquerque, users were — and still are — being charged $1.50 a night, period.

    What gives? Back in November, Redbox reps told me that the company reserves the right to "conduct tests on an ongoing basis as part of our regular course of business," and that appears to be what's happening now. In its most recent statement, Redbox says that it will "continue the test until we can understand the implications," and that there is "no definitive end date."

    So, here's the big question: Is the end of $1-a-night rentals at Redbox nigh? Naturally, the DVD kiosk isn't tipping its hand, but I have to say: If Redbox moves ahead with a permanent price hike, it does so at its peril. Plenty of Redbox fans have commented in the past that they'd be ready to jump ship if and when Redbox raises its prices for good, and I'm seeing the same sentiments in the Inside Redbox comments.

    Of course, the danger of losing customers to a price increase isn't lost on Redbox, hence all the "price point testing" to suss out a sweet spot — or a squeal point, depending on how you look at it.

    So, I'm curious: Any of you Redbox users seeing price increases at the kiosks in your area? How much more would you be willing to pay before you jumped ship for Blockbuster Express or went back to Netflix

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