Monday, April 14, 2008

Should Blockbuster buy Redbox?

That's the question that NewTeeVee's Chris Albrecht asks in a recent post at the site's blog. While Blockbuster clearly needs to do something to avoid getting further eviscerated by Netflix and a host of others, their current plan to build a set-top box and allow direct download video rentals might not be the right course to take at this point. After all, as Albrecht notes, "getting into the hardware game will be an expensive endeavor, especially in an increasingly crowded field already packed with big names like Apple, TiVo, Xbox 360, Vudu and soon the Netflix LG box."

Instead of going that route, what about picking up Redbox, whose self-service kiosks are already deployed to over 6,800 sites across the US? He makes a pretty interesting case for the plan:
Going out into the real world to download something may seem like an unnecessary step, but it’s actually more of a transitional one because it combines elements people are already familiar with.

First, people still go to video stores. In adding these kiosks to their real-world locations, Blockbuster would bridge the the familiar experience of browsing the aisles for a movie with the more unfamiliar one of digital delivery.

Second, by using existing set-top services like TiVo, people wouldn’t feel like they have to buy a new device, or worry about buying one that will die quickly (read: HD DVD).

Finally, by leveraging the existing Redbox kiosks in non-video locations like grocery stores, Blockbuster could take advantage of impulse renting. People are already used to the idea of DVDs being sold in supermarkets, this would nudge them a little further and into downloads.
I don't think a lot of marketers realize just how difficult it is to break people of their habits. I also get the feeling that too many of them don't fully understand that when people are out shopping for one thing -- say shampoo or cereal -- they're primed to be on the lookout for other things, even other unrelated things, hence the appeal of Redbox's kiosks in all sorts of different retail stores. This is just my personal opinion, but Blockbuster buying Redbox makes a lot more sense than trying to launch a VOD product or buy Circuit City, which was their new (yet definitely not improved) plan as of this morning.

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1 comment:

Anonymous said...

I think that Blockbuster should seriously buy DVDPlay instead of Redbox. Not only are they cheaper, but they are also in more retail grocery stores and are less reliant on fast food chains for their customer base.