Redbox Competitors Analysis

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Redbox Automated Retail LLC is an American company specializing in DVD, 4K UHD, Blu-ray, and formerly video game rentals via automated retail kiosks. Founded in 2002, the company facilitates the convenient rental of movies through more than 30,000 automated retail kiosks. It has its headquarters in Oakbrook Terrace, Illinois.

Redbox competes in the movie rental industry and the on-demand movie streaming industry. The mention of movie rentals stirs up thoughts of Blockbuster, a once-popular brick-and-mortar rental company that filed for bankruptcy in 2010. The collapse of Blockbuster created an opportunity for Redbox to emerge as a dominant player in the movie rental industry. 

However, the emergence of on-demand movie streaming services, such as Netflix and Amazon Prime Video, disrupted the movie rental industry. In response, Redbox created its own on-demand movie streaming service, Redbox on Demand. This strategy is perhaps the reason why Redbox is still in business today. 

Given the competitive landscape, it’s interesting to see how Redbox stands out as a leader in the industry. This Redbox competitors analysis will provide insights into the company’s competitive advantages and a detailed overview of the competitive landscape.

redbox

Bottom Line Up Front

Redbox not only competes in the movie rental industry but also in the on-demand movie streaming industry. Despite the declining popularity of physical media and the rise of streaming, Redbox still managed to maintain its place as a top movie rental company.

Its focus on convenience, diversification, and customer service allowed it to weather the storm when similar companies, such as Blockbuster, filed for bankruptcy. In addition, Redbox’s ability to quickly adapt to the changing landscape of the movie industry is a significant strength.

List of Redbox Competitors

  1. Netflix
  2. Amazon Prime Video
  3. Hulu
  4. HBO Max
  5. Disney+

Brief History of Redbox

The Redbox story is a classic case of American entrepreneurship. It began with the McDonald’s business development team, which created Kiosks that sold convenience store items like candy, snacks, and soft drinks. McDonald’s operated these kiosks under the name TickTok Easy Shop. 

However, in 2003, it stopped selling convenience store items and focused on its core business of selling food. Gregg Kaplan was a part of the McDonald’s team that developed the Kiosks. He saw an opportunity in the DVD rental business and used the kiosks to rent out DVDs and video games. The company launched its first DVD rental kiosk in Denver, Colorado, in 2004. 

Later, in 2005, Coinstar, an operator of coin-cashing machines, acquired a 47% stake in Redbox for $32 million. After failing to sell the remaining share to Netflix and Blockbuster, McDonald’s sold the remaining 53% stake to Coinstar in 2009 for $175 million. Redbox became a wholly-owned subsidiary of Outerwall, Coinstar’s parent company.

Apollo acquired Outerwall in 2016 and split the company into three separate entities, Redbox, Coinstar, and ecoATM. In 2021, Redbox agreed to merge with Seaport Global Acquisition, a special purpose acquisition company. The merger resulted in Redbox going public under the ticker symbol RDBK.

On May 11, 2022, Chicken Soup for the Soul Entertainment announced its plans to acquire Redbox for $375 million. As the company awaits regulatory approval, it plans to operate Redbox as a separate subsidiary. As of July 2022, the company had a market cap of $248.792 million, with a 52-week range of $1.61 to $27.22. 

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Redbox Growth Strategy and Business Model

Redbox poises its long-term growth to its legacy and digital businesses. The company’s legacy business includes physical kiosks, Redbox Entertainment, and Redbox service. On the other hand, the digital business comprises an ecosystem of on-demand and digital content through the Redbox app. 

One of the company’s goals is to penetrate and establish a leadership position in the $58 billion digital market. It plans to invest in ad-supported and new content and deploy subscription-on-demand (SVOD) channels. Its large and differentiated customer base gives it a competitive advantage in the direct-to-consumer (DTC) digital business. 

Redbox generates revenue primarily from renting and selling movies and TV shows through its physical kiosks and digital channels. Other sources of revenue include licensing fees from selling downstream rights through the Redbox entertainment label, fees from servicing and merchandising kiosks belonging to other owners, and digital advertising.

In 2021, Redbox had $288.5 million in net revenue, representing a 47.2% decline from 2020. The company attributed the decrease in revenue to the pandemic as studios delayed the release of new movies. The company’s Adjusted EBITDA was $15.1 million in 2021, compared to $128.9 million in 2020.

Redbox Competitor Analysis

The movie rental industry and on-demand streaming services have undergone massive changes in the past years. Redbox has had to reinvent its business model to survive the changing consumer habits and competition. Despite the challenges, the company is still one of the leading providers of physical movie rentals and holds a significant share of on-demand streaming services. 

This section will analyze Redbox’s key competitors looking at their competitive advantages, financials, and business models.

1. Netflix

netflix

Netflix is the largest on-demand streaming service in the world. Founded in 1997, the company started as a DVD rental service before transitioning to streaming in 2007. It facilitates the streaming of movies, TV shows, and documentaries. As of July 2022, Netflix had 220 million paid subscribers worldwide. 

The company attributes its growth to its focus on providing its subscribers with what they want. Its diversity in content, personalization through algorithms, and global expansion set it apart from the competition. Although the company has had to incur massive debt to finance its growth, it’s still profitable. In 2021, Netflix had $29.698 billion in revenue, up from 24.99% in 2020, and $5.116 billion in net income, up from 85.28% in 2020. Its long-term debt as of June 30, 2022, was $14.233 billion.

Netflix’s primary source of revenue is subscriptions to its streaming services. Unlike Redbox, it doesn’t sell advertising or gain revenue from licensing its content. However, it still rents out DVDs through a subscription-based model. You can add a DVD plan to your streaming account and receive one DVD at a time.

Like Redbox, Netflix’s growth to become the world’s largest streaming service wasn’t without hurdles. For one, it has limited copyright and intellectual property, which tolls its ability to create original content. In the second quarter of 2022, the company lost about one million subscribers worldwide. Analysts speculate adverse economic conditions, intensifying competition, and a change in consumer behavior are reasons for the decline.

To curtail the decline in growth and mitigate the effects of intensifying competition, Netflix announced it would introduce ads in some countries. The move is a departure from its long-standing policy of not running ads. Compared to Redbox, it’s in a far better financial position and can weather the storm a little longer.

See also: Netflix Competitors Analysis

2. Amazon Prime Video

amazon prime video

Amazon Prime Video is an on-demand streaming service owned by Amazon. It’s the world’s second-largest on-demand streaming service, with over 200 million subscribers, with forecasts to reach 252 million by 2027. The company offers its subscribers a wide range of TV shows, movies, and Amazon Originals.

The backing of the larger Amazon Company gives Prime Video a significant competitive advantage. It can rely on Amazon’s customer base and promotional resources to drive growth. The company has also quickly adopted new technologies, such as 4K and HDR content, to improve the quality of its services. Its focus on providing a comprehensive customer experience is another differentiating factor. For instance, it integrated Prime Video with Amazon Fire TV to make it easier for users to find and watch their favorite shows.

Despite its advantages, Amazon Prime Video faces many of the same challenges as Netflix. It has to license most of its content from studios and production companies, which limits its ability to create original programming. The company must also spend heavily on marketing and promotions to drive awareness and adoption. In 2021, Amazon Prime had $32 billion in revenue, with Amazon Prime Video contributing the most significant chunk of the share.

Unlike Netflix and Redbox, Amazon Prime Video doesn’t advertise its service. Instead, it focuses on driving growth through its Prime membership program. The company has been successful in this strategy, as evidenced by its rapid subscriber growth. However, an additional paid subscription allows you to access content and channels from third-party providers.

Amazon dwarfs Redbox in the on-demand streaming market. The company has a larger customer base, more financial resources, and a better ability to create original content. However, its dependence on licensing deals with studios and production companies is an Achilles heel.

3. Hulu

HULU

Hulu is an American subscription streaming partially owned by NBCUnviersal’s Comcast and majority owned by The Walt Disney Company. The company launched in 2007 and currently offers a library of on-demand TV shows and movies from Freeform, ABC, NBC, and FX. It also has Hulu Original Programming, which includes hit shows like The Handmaid’s Tale and The Path.

Hulu doesn’t have as many subscribers as Netflix or Amazon, but it has more subscribers than Redbox. As of its second quarter of 2022, Hulu had 45.6 million paying subscribers, which is way more than the 39 million Redbox had in 2021. It makes money in two main ways: advertising and subscription revenue.

Advertising is the primary source of revenue for Hulu. The company sells ad space on its platform to brands looking to reach a specific demographic. For instance, it has partnerships with brands like Toyota and GEICO. Hulu’s dependence on advertising makes it more vulnerable to economic downturns. Advertisers are typically the first to cut spending during a recession, which would negatively impact Hulu’s bottom line. 

In addition to advertising, Hulu generates revenue through subscription fees. It offers two main subscription tiers: a basic tier that includes ads and an ad-free premium tier. The company has successfully convinced users to pay for its premium offering, which gives it a competitive advantage over other ad-supported streaming services.

4. HBO Max

hbomax

HBO Max is a streaming service launched by WarnerMedia in 2020. It includes content built around the HBO brand, as well as Max originals and a library of movies and TV shows from Warner Bros., New Line, DC, CNN, TNT, TBS, truTV, The CW, Cartoon Network, Adult Swim, Crunchyroll, Rooster Teeth, and Looney Tunes. HBO Max is only available in the United States and its territories.

HBO Max has a lot of potential but is still in its early stages. According to The Hollywood Reporter, HBO and HBO Max ended 2021 with more than 73.8 million subscribers. Despite its strong start, WarnerMedia is still behind Netflix and Amazon in total subscribers. HBO Max is only available in the United States, which limits its addressable market.

HBO Max makes money mainly through subscription revenue. In 2020, the company had about $6.1 billion from subscriptions. This figure represents approximately 89.45% of its total revenue. Other revenue sources include content licensing, advertising, and selling merchandise through the HBO shop. Competing in the streaming market is expensive, and HBO Max will need to continue to invest heavily in content and marketing to grow its subscriber base.

Unlike Redbox, it doesn’t rent out physical DVDs, so it doesn’t have to worry about the cost of maintaining a fleet of kiosks. HBO Max is also willing to spend more on content than Redbox. For instance, it has already signed deals with J.J. Abrams, Greg Berlanti, and Reese Witherspoon. These deals are expensive but necessary to compete in the streaming market.

5. Disney+

disney+

Disney+ is a streaming service launched by The Walt Disney Company in 2019. It includes content from Disney, Pixar, Marvel, Star Wars, National Geographic, and more. As of its second quarter of 2022, the service had 137.7 million subscribers. Disney+ enjoys its parent company’s scale and reach, giving it a competitive advantage over other streaming services.

While it has Hulu and ESPN+, Disney+ is the company’s flagship streaming service. It’s available in most countries worldwide and has a growing content library. Perhaps its most significant advantage is its brand recognition. Consumers trust Disney to deliver quality content for the whole family, which gives it a leg up over other streaming services.

Moreover, the larger Disney empire gives it an extensive content library, including movies, TV shows, and documentaries. It also has the advantage of producing its content, which gives it more control over its destiny. For instance, Disney+ was the exclusive home of The Mandalorian, one of the most popular streaming shows of 2020. 

It makes money mainly through subscription revenue and doesn’t rely on advertising like Redbox or many of its competitors. The company has a strong balance sheet and can afford to invest heavily in content and marketing. Moreover, the coaction with its other businesses gives it a competitive advantage. For instance, Disney can promote its streaming service on its theme parks and merchandise.

Revenue-wise, Disney+ is in a relatively strong position. With over 130 subscribers, it was generating average monthly revenue of $4.35 per paying subscriber in the second quarter of 2022. This figure is an increase compared to $3.99 in the first quarter of 2022. Redbox must increase its content offerings and marketing to compete with Disney+.

Redbox SWOT Analysis

Below are the strengths, weaknesses, opportunities, and threats of Redbox:

Strengths

  • Flexible rental terms
  • String brand recognition
  • Extensive distribution network
  • Simple and easy-to-use interface
  • Affordable pricing
  • Diversified revenue model

Weaknesses

  • Highly dependent on physical locations
  • Lack of original content
  • A limited selection of titles
  • Lacks strong financials

Opportunities

  • Expanding its digital business
  • Leveraging its brand recognition
  • Developing original content
  • Penetrating new markets

Threats

  • Intense competition
  • Shifting consumer preferences
  • The high cost of content acquisition
  • Government regulations
  • Declining DVD sales

redbox coming soon

Redbox Competitors Analysis (FAQs)

Question: What is Redbox’s industry?

Answer: Redbox competes in the video rental industry. However, it also offers streaming and digital rentals. Although it’s best known for its physical DVD rentals, the company is pushing into digital streaming with its Redbox On Demand service.

Question: What companies has Redbox acquired?

Answer: Redbox hasn’t acquired any company. However, it has entered into partnerships with some of the biggest names in the entertainment industry. For instance, it has a partnership with Warner Bros. for new release DVDs and Blu-rays.

Question: What is Redbox’s competitive advantage?

Answer: Redbox’s competitive advantages include its flexible rental terms, vast distribution network, and brand recognition. While it doesn’t have the same content library as its competitors, it’s still a popular choice for movie rentals. Some of its other advantages include its simple interface and affordable pricing.

Conclusion

Redbox’s SWOT analysis, compared to its competitors, shows that it’s a strong player in the video rental industry. However, it doesn’t have the same video-on-demand streaming service’s market reach or scale. Moreover, its financials aren’t as strong as its competitors. Nonetheless, Redbox has a loyal customer base and continues to grow its business.

If it can leverage its brand recognition and expand its digital offerings, it has a good chance of competing against the likes of Netflix and Amazon Prime Video. Other players competing for market share include Hulu, HBO Max, and Disney+.

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