Remember rummaging those dusty shelves for a movie night? Today it‘s unthinkable, with films streamed instantly across devices. But when Netflix slayed mega-chain Blockbuster, another foe exploited the carnage—100,000 "big red boxes" spread nationwide.
This is the story of Redbox, whose meteoric rise and recent resilience spotlight shifting entertainment consumption models. Come glimpse this retail phenom’s cunning innovations and battles against both digital disruption and industry giants.
DVD’s Glory Days Birth an Empire
First, let‘s rewind to 2002, the peak of plastic disc dominance. DVD rentals and sales surpassed $17 billion that year in the U.S. alone. Growth seemed limitless.
Sensing this fervor, McDonald‘s birthed an automated retail arm called Tick Tock Easy Shop—vending convenient store items inside its restaurants. But gains proved meager, and McDonald‘s scrapped Tick Tock in 2003.
Yet from failure emerged inspiration…
The Big Red Box is Born
McDonald’s exec Gregg Kaplan envisioned Tick Tock’s potential beyond Happy Meal toys. Why not rent the hottest DVDs?
He tested this concept in 2004 using old kiosks. In a genius stroke, customers could return discs anywhere—no late fees.
The trials succeeded spectacularly. Sensing a rising star, kiosk firm Coinstar bought a 47% stake in Kaplan’s project, now dubbed Redbox.
Over the next four years, they rapidly deployed Redboxes nationwide. And soon those big red boxes became ubiquitous outside pharmacies, supermarkets and fast food joints from Alabama to Wyoming.
But Redbox didn’t settle for ubiquity. It was just getting started…
Toppling the Giant: Rise to #1 Rental Company
Despite overtures, Netflix declined an early stake in this upstart company. Yet Redbox had quietly passed 10,000 locations in 2008—achieving scale beyond brick and mortars.
Soon came milestones…
- 100 million rentals by February 2008
- 500 million rentals by January 2010.
Then the meteoric climax…
- One billion rentals by September 2010!
By 2011, Redbox claimed an astounding 36% disc rental market share, rocketing past Netflix and Blockbuster as the nation’s top rental firm. How? By slashing prices and expanding one “big red box” at a time.
In 2013 Redbox hit its zenith, nibbling over 50% of all U.S. disc rentals. But the good times couldn‘t last as the streaming revolution loomed…
Redbox annual revenue rose stratospherically before peaking in 2013. Thereafter streaming disruption sapped industry profits even as Redbox stabilized via diversification. Source: Statista
Brawling With Hollywood and Blockbuster
Having conquered customers, Redbox soon battled movie studios reluctant to enable cheap, no-commitment $1-per-night rentals.
Companies like Fox and Universal even withheld new releases for 28 days until contractual disputes mandated shorter delays. Why fight your best customers? Analysts blamed residual loyalties to fading Blockbuster stemming from their license fees sustaining studios for years.
While migration to digital formats slowed revenue growth, Redbox kept rewinding consumer preferences back towards tangible media. Their handy kiosks just kept spinning profits from new DVD releases.
Through clever integration of digital offerings, Redbox aims to squeeze remaining value from its unparalleled retail footprint in the years ahead. Because 100,000 big red boxes still dot our landscape, enduring as living monuments commemorating entertainment’s physical era.
And Redbox‘s next chapter now begins…
