Competing with Technology – the Redbox Story

Competing with Technology – The Redbox Story

        Redbox has quickly become the industry leader for movie and video game rentals.  With more than 28,000 locations nationwide, Redbox’s new technology has rivaled giants such as Blockbuster and Hollywood Video.  Redbox is a fully automated video rental kiosk.  This new technology has challenged many traditional movie establishments.  Redbox estimates that more than 68 percent of the U.S. population is within a 5 minute drive of one of their kiosks.  Redbox focuses its business on four concepts to make its business grow.  These four concepts are:

1. Convenient – Redbox’s are specifically located in convenient locations.  From grocery stores to McDonald’s, Redbox are placed in areas where it’s easy for consumers to use their kiosk systems.
2. Easy – The Redbox technology is easy and convenient to use.  These small kiosks which are 12 square feet in size house over 630 DVD’s.  This self-automated kiosk has a touch screen that rent and return DVD’s in quick times.  Redbox also has an automated system that integrates with smart phones such as Android’s mobile apps.  These systems allow users to reserve DVD’s online with ease.  Through easier and convenient user access, Redbox has rivaled traditional video stores with lagging technology.  
3. Affordable – Redbox has focused its business model on low cost products.  Offering DVD’s for under $2 and in most cases $1.20 per DVD allows Redbox to lower barriers to entry.  Traditional video stores charge upwards of $5 per DVD rental.  Redbox’s automated kiosk is a low cost alternative which has low overhead and operating costs.
4. Fun – Redbox has the newest movie and video game releases.  They have online coupons and discounts offered through www.Redbox.com.  Redbox wants to provide families with a low cost fun option.  

        In this research paper we will discuss the technology of Redbox, key technical details from a managerial perspective, history and current status of this new technology.  We will review the Competitive Advantage that Redbox has gained by discussing Porter’s Competitive Forces model which includes Barriers to Entry and the low cost advantage Redbox is obtaining.

        As Redbox has developed this new technology and grown so quickly it also has encountered across many challenges.  We will discuss the challenges, ethical and social issues Redbox has discovered with this new technology.  As Redbox grows and encounters its challenges it will grow from a national organization to a global organization.  Redbox is a company that has a bright future with a new technology that is changing the movie and rental industry as a whole.

Technology

        Redbox originated in 2002 as it was initially funded by McDonald’s Corporation.  The beginning of Redbox was started as they placed 11 kiosk DVD rental machines throughout Washington Metropolitan Area locations.  This test run was a success which later spurred a technology craze that has grown to over 28,000 DVD kiosks across the United States.

        Redbox initially used re-branded kiosks that were manufactured by a Silicon-Valley based company named DVDplay.  Within a year Redbox contracted Soliction to build its DVD kiosk machines.  These 12 square video kiosks are self-serviced vending kiosks that are built with an interactive touch screen and a video sign.  Redbox uses a robotic disk array system with a stacked carousel of DVD’s.  It has a web linked electronic communications system that helps consumers execute DVD options and selections within seconds.  The Redbox DVD kiosk is built to operate in any weather conditions.  These sytems can be used inside stores such as McDonald’s, Wal-Mart or Walgreens.  It also has the ability to be used or placed outside.  The Redbox kiosk is built to operate in severe cold, snow or even rainy weather.  

        The Redbox kiosk is built as modules.  This allows Redbox to connect additional machines in areas of high sales volume and customer demand.  The ability for Redbox to easily contact the Redbox kiosk has increased sales as they can adjust for customer’s demands.

        Redbox’s kiosks have real time inventory updates which allow consumers to reserve DVD’s or video games online.  Through www.Redbox.com consumers can see what DVD’s are available at any kiosk, reserve their DVD’s and look for coupons or discounts that Redbox offers.  This interactive system is also available through applications with Smartphones which allow consumers to make transactions through these new web devices.  Redbox uses a bar-coded DVD tray to track when a DVD is delivered by and returned to a kiosk.  This allows Redbox to manage its interactive system and customers to reserve DVD‘s online.