I wrote a post about Redbox three years ago in which I said that Redbox was making an error in charging “new release” prices for non-new release movies.  If I can buy the movie at the discount bin at Wal-Mart for $5, I shouldn’t have to pay $5 to rent the movie for one day, right? So this is my observation on the current state of the home video market.

In the 1980’s and 90’s if you wanted to watch a movie at home, you had to go to Blockbuster Video (or another video store) and rent the physical copy to take home and use in whatever player you owned (mostly VHS and DVD).   Netflix started in 1998 as a direct-mail-to-home video service.  They charged a flat fee and you got home movies, including new releases.  In 2007 Netflix started offering streaming movies across an internet connection.   But this was still mostly older movies, and if you wanted new releases, you still had to go to Blockbuster (or have Netflix mail you the disc).

Enter Redbox, which passed up Blockbuster in 2007 as the #1 rental service for videos.  Their cheap service, with which you could rent a new release movie for around $1, was groundbreaking, in that you could return a video anywhere and you only ever paid $1 a day for the movie.  They quickly took over market share, and eventually started their streaming service that I referenced above.  Note:  a year after I wrote that post, they shut down the streaming service because “it was not as successful as we hoped it would be.”

But Redbox is still the go-to place to rent a DVD or Blu-ray disc.  For now.

Because there are now several ways to rent streaming videos of new release movies, and most of them still cost about $5 per movie.  But a new service has emerged called VidAngel, which is challenging that price.   If Redbox doesn’t lower their pricing and start streaming new release videos at lower prices, they may find themselves sitting next to Blockbuster on the bus to bankruptcy.

See, VidAngel works like this:  You buy a movie for $20.  Any movie.  You watch the movie, and then sell it back to them for $18.  Then that $18 sits as a credit on your account, waiting for the next time you want to rent a movie.  So the next time you rent, you get a new release streamed movie for only $2 (only $1 for standard definition).  That means that I can sit here at home and rent a new-release movie for basically the same price as it would cost for me to drive to a Redbox and rent the movie, but I don’t have to drive anywhere, and I don’t have to worry about returning the movie.  When the movie is over, I can just select “sell back.”    A bonus feature for me is that VidAngel was created in order to filter out things in the movie I don’t want to see or hear like swearing, nudity, pornography, etc.  But you don’t have to have those things filtered if that’s your deal.  You can have it just filter out the end credits, and the movie is exactly the same.

My point here is that if VidAngel can provide a streaming rental service of $1-2 per movie, some other company is going to figure out that they can do the same thing, and whoever figures that out is going to put Redbox out of business. Why rent a movie 2 miles away when you can rent the same movie for the same price without leaving your house?    If pizza delivery was the same price as carryout and was guaranteed in 30 minutes, nobody would ever carryout.

Wake up, Redbox.  Your time is running out.