Netflix to lose business to Redbox

Redbox.comNetflix just announced that they’re raising prices again. It seems that they are trying to phase out DVDs for streaming. Of course, discs ARE dead, but they aren’t quite gone yet. And that includes Blu-ray. (That’s part of why the studios are pushing Blu-ray sales so hard right now, because they know it’s got a short sales-life.)

Even with that in mind, I’ll say that Redbox has a good shot coming up here very soon…

Netflix.comI was a big fan of Redbox when they first started, and rented from them more often than I use to rent from Blockbuster or Hollywood video. I even got lots of other people hooked on those kiosks. Then by 2007/2008 streaming started to take off. That was the beginning of the end for discs right there. However, there’s still a market for the next couple years – more than enough for Redbox to make a few bucks and get their streaming service up and running to compete with Netflix. Until today, I thought Netflix had effectively killed Redbox, but with the price going to $16 a month for such a “frivolous” service, it looks like I’ll be cancelling the “disc” portion of Netflix and just doing the ‘steaming only’ version. Then, for the new releases and those ‘bonus features’ discs, I’ll be going back to Redbox. (I hope they don’t hold a grudge for me dumping them the way I did!)

VidTaggr.comIn the coming years, as the television and movie studios start (or perfect) their own streaming services, it’ll be interesting to see what price points and features they end up developing. And with a little luck VidTaggr (http://VidTaggr.com) will be able to fill-in for lack of bonus features and added content that streaming-only content just doesn’t have.

MSNBC.com

http://www.msnbc.msn.com/id/43729443/ns/technology_and_science-tech_and_gadgets/?GT1=43001

 

Prediction (even if it is obvious)

It seems obvious that Netflix has some high overhead with the DVD distribution centers, considering machinery and automation, payroll, mailing costs and physical disks. They MUST know that a large percentage of people will drop the DVD portion of their Netflix plan. The movie studios have been withholding their steaming licenses from Netflix because they likely get more money from the disks due to overall overhead costs and because the disks are primarily the new releases that a lot of people want to see. (That’s why Redbox will get a big boost in the coming months.) The studios will begin getting less income from those Netflix DVD contracts and ask ‘Why?’ Then Netflix says ‘People want new movies to be streaming, but you won’t license them to us.’ The studios want that cash. So they’ll start changing those contracts to include streaming of new video.

During this time, Redbox will start doing great. They’ll get their streaming plan up and running, but they won’t be able to compete with Netflix and, as I and many other people have said, ‘disks are dead’ – so Redbox will likely die out in mass around 2015. That may seem sad, but by then most new content will be streamed. (Buy Redbox/Coinstar stock now, sell it within a few years.)