How come redbox is cheaper than renting online?

[Inspector Jihad]

I figure amazon should be able to do 99 cent rentals per 24 hour period, but most of their movies are 2.99. I figure it might be due to some absurd contracts that they have with the MPAA. I don't see any valid reason why redbox should be cheaper than streaming.

 

[Bignate603]

I would think that part of it is a convenience factor. People are willing to pay more because they don't need to leave the house. Also, the movie library on Amazon is much larger than you'll find in a redbox. While newer movies are available on Redbox you won't find some of the stuff that's been out a while which Amazon still carries.

 

[TallBill]

I would think that part of it is a convenience factor. People are willing to pay more because they don't need to leave the house. Also, the movie library on Amazon is much larger than you'll find in a redbox. While newer movies are available on Redbox you won't find some of the stuff that's been out a while which Amazon still carries.

That doesn't answer the question at all.

 

[Ns1]

amazon decided they couldn't make a profit at $1?

 

[Schadenfroh]

I figure it might be due to some absurd contracts that they have with the MPAA. I don't see any valid reason why redbox should be cheaper than streaming.

I would imagine that it is the MPAA as well, they think that physical disks are bullet proof, where as streaming means it goes directly to the torrent sites, so they must charge more to offset losses.

 

[xSauronx]

amazon decided they couldn't make a profit at $1?

netflix has, of late, said that they prefer to stream movies than mail them because its cheaper for them, i dont remember exactly, but it was less than a dime per movie

amazon is doing it because they can, or to see if they can. i have netflix...so im not interested in amazons service

 

[Inspector Jihad]

i have netflix and i love it, but they don't have new releases and redbox is the best option for that. hopefully when online streaming gains more traction, the suits will realize that they can make money off it and not handicap it like they are doing right now.

 

[Bignate603]

That doesn't answer the question at all.

Yes, it does.

Redbox you need to leave the house to get your movie, for Amazon's online rental service you don't and you can start streaming it immediately. Thus, some people will be willing to pay more for it. Plenty of people pay extra to have things delivered to their homes rather than going out and getting it themselves.

Redbox has a limited library because it all has to fit in the machine. If they don't carry it (and they don't carry much besides newer movies) you're forced to go to another service like Amazon who can charge more because you don't have as many other options. Less availability means higher prices.

There may be contractual reasons why they charge more, but even if they pay the same per movie as Redbox I would think Amazon would charge more just because they can. Their goal is to maximize their profits, if they see an opportunity to charge significantly more than their costs they'll take it.

 

[daw123]

I would imagine that it is the MPAA as well, they think that physical disks are bullet proof, where as streaming means it goes directly to the torrent sites, so they must charge more to offset losses.

I think it has a lot to do with this.

 

[LikeLinus]

I figure amazon should be able to do 99 cent rentals per 24 hour period, but most of their movies are 2.99. I figure it might be due to some absurd contracts that they have with the MPAA. I don't see any valid reason why redbox should be cheaper than streaming.

Bandwidth cost money? Because they can?

 

[Engineer]

Bandwidth cost money? Because they can?

True but those vending machines aren't free and it takes workers driving around filling them up not to mention that the do have an online network that shows what movies are available at each branch. That isn't free either.

I'm surprised that they can do it for this price but I guess if Pepsi can sell cans of pop for $0.50 out of vending (chilled no less) and make money, so can the movie industry.

 

[Bignate603]

True but those vending machines aren't free and it takes workers driving around filling them up not to mention that the do have an online network that shows what movies are available at each branch. That isn't free either.

I'm surprised that they can do it for this price but I guess if Pepsi can sell cans of pop for $0.50 out of vending (chilled no less) and make money, so can the movie industry.

That's why I think Amazon does it just because they can. Poke around the forum here and you'll see plenty of people that would gladly pay an extra $2 so they don't have to leave the house.

 

[3chordcharlie]

True but those vending machines aren't free and it takes workers driving around filling them up not to mention that the do have an online network that shows what movies are available at each branch. That isn't free either.

I'm surprised that they can do it for this price but I guess if Pepsi can sell cans of pop for $0.50 out of vending (chilled no less) and make money, so can the movie industry.

Charging 'convenience fees' for using a cheaper business model should turn out to be an unsustainable policy in a competitive market. Then again, the banks still charge to use an unstaffed machine, and let you see a teller for free.

 

[LikeLinus]

True but those vending machines aren't free and it takes workers driving around filling them up.

Neither are the network engineers and programmers who have to keep Amazon's services afloat either. I'm venture to guess they are more expensive than someone who fills a vending machine.

As others also commented on, there's probably more cost associated with the licensing fee to digitally stream a movie vs. a hard copy DVD.

Same reason those assholes at Ticketmaster charge you a "convenience fee" and a fee to print your own tickets.

 

[lxskllr]

That's why I think Amazon does it just because they can. Poke around the forum here and you'll see plenty of people that would gladly pay an extra $2 so they don't have to leave the house.

With gas prices at ~$2.80 per gallon, it isn't an insignificant expense driving to a RedBox. That brings the numbers much closer for many people.

 

[goog40]

The difference is that Amazon most likely has to give a cut of each movie that's rented to the studio, whereas Redbox probably has set expenses that they pay regardless of whether a movie's rented once or 100 times.

 

[Engineer]

With gas prices at ~$2.80 per gallon, it isn't an insignificant expense driving to a RedBox. That brings the numbers much closer for many people.

I can walk to the Redbox in less than 15 minutes.

 

[bruceb]

The company that owns Redbox ( Coinstar .. CSTR ) on Friday announced it was going into the streaming video arena. It also turned in a very strong 3rd quarter result. Market took it very well, sending CSTR up $11 .. This stock could be your next home run, like Netflix ( NFLX ) was if you got in when it was cheap.

http://www.fool.com/investing/general/2010/10/29/coinstar-shares-popped-what-you-need-to-know.aspx

 

[LikeLinus]

I can walk to the Redbox in less than 15 minutes.

Seriously. There's got to be like 100 of those boxes on my drive to and from work. I think most people would stop on their way home to drop/pick up movies.

 

[lxskllr]

I can walk to the Redbox in less than 15 minutes.

I don't really watch movies, but I think the closest one to me is about 5 miles away. That's 20 miles of driving to get a movie, and my Jeep gets ~18mpg. I'm looking at ~$2.90 in transportation costs getting a movie.

 

[Bignate603]

Charging 'convenience fees' for using a cheaper business model should turn out to be an unsustainable policy in a competitive market. Then again, the banks still charge to use an unstaffed machine, and let you see a teller for free.

In a truly open marketplace there would be more companies that begin to compete and drive the cost down if the business model is truly cheaper, however, anything to do with media right now is definitely not an open marketplace and the barriers for competing companies to enter are not easy to overcome. This will help allow Amazon to keep its prices higher.

Also, I don't know what crummy bank you use but I've never seen one that charges you a fee to use their own ATMs.

 

[Engineer]

The company that owns Redbox ( Coinstar .. CSTR ) on Friday announced it was going into the streaming video arena. Market took it very well, sending CSTR up $11 .. This stock could be your next home run, like Netflix ( NFLX ) was if you got in when it was cheap.

Makes sense why there are Coinstar machines next to the Redboxes at many location. Kill two birds with one stone (refilling and servicing the machines).

 

[Engineer]

Also, I don't know what crummy bank you use but I've never seen one that charges you a fee to use their own ATMs.

They did in the past but not lately that I know of.

 

[Bignate603]

They did in the past but not lately that I know of.

I've only been using debit cards for the past 10 years, haven't run into one yet. I guess I wouldn't be surprised if they used to do it when ATMs where newer, by the time I started using them they were pretty common place.

 

[DaveSimmons]

Amazon and iTunes are at the mercy of the studios and networks. Both would be happy to offer 99 cent rentals of TV shows for example, but Warner Brothers feels that's too low so CW shows must be sold at 1.99/episode (2.99 for HD!) instead.