Simplify: A route to Market

Movie rentals have been evolving for some time.  First came the neighborhood stores.  Then the nationals took over.   However after going to a physical location, you couldn't always find what you wanted. 

Enter the Internet and Netflix.  Now they just send you what ever you want.  But you do have to plan ahead.

So Blockbuster responds with their Netflix wannabe plus the option to go to the local store.  But you still have to plan ahead or take your chances.  Plus you have to either shell out $4 per rental when you do find something or you sign up for a monthly plan.  And Blockbuster hosed a useful website.  Don't believe me?  Tell me what movies have been released for the past three months.  Cannot be done.

So Coinstar (the grocery store change counters and gum ball machines) get McDonald's Ventures to invest some burger bucks along with Coinstar's $20M to come out with Redbox.    Redbox is a DVD rental dispenser.    For $1 / night you get to take home a movie.  After 25 nights, the movie is yours.   Because you need a credit or debit card to rent, they figured you were probably 17 anyhow, so no problem with the R rated movies.   

But they also use the Internet in a clever way.  Each machine's inventory is online.  So before you hop into your car, you can search for movies and see what's in stock.   That's what sold me.  Plus the movies are due at 7 pm the next day.  Shopping at 6am, no problem.  And you can pick up a load of bread.

Originally the concept was bought off by McDonald to put increase food sales at their properties.  Didn't happen.  So Redbox is adapting and moving into grocery stores who had to close down their own video stores after the nationals ate their lunch.

Ah, but there is also Comcast's on demand.  But they also charge $4, don't support surround sound, and don't have the DVD extras. 

The marketing lesson here?   Watch the trends, pick out the core value, and deliver it.   Redbox is not in the clear.   If Blockbuster came out with "Bluebox" and did deals with Kroger and the other major grocery chains, bye bye Redbox.   So Redbox has to be hustling to lock in as much as they can.

Comments

[Rob O'Regan]

great post, Bruce. Innovation is great, but short-lived. If you think one breakthrough innovation is enough, you're doomed. Netflix had better be planning the Next Big Thing...

Happy New Year!