×

Redbox to Hike Rental Price of DVDs by 25%

Blu-ray rentals to increase 33% on Dec. 2; videogame daily rentals to increase from $2 to $3

Redbox next week will raise the daily rental prices of DVDs and Blu-ray Discs, followed by a 50% jump in videogame rental fees in January — moves that parent company Outerwall expects to have an “adverse impact” on rental volumes.

As of Dec. 2, 2014, the daily rental rate for DVDs will increase from $1.20 to $1.50, and the daily rental rate for a Blu-ray Disc will increase from $1.50 to $2. And starting Jan. 6, 2015, the daily rental rate for video games will increase from $2 to $3. The company added that prices may vary depending on location.

Outerwall’s stock jumped more than 7% Monday on the announcement, hitting $68.40 per share (up $4.84) in early trading.

“I would expect consumers that continue to use Redbox to adjust their usage patterns with reduced basket sizes and/or holding periods along with being more aggressive with promotional-offer usage,” B. Riley & Co. analyst Eric Wold wrote in a research note Monday.

Wold, who currently has a “neutral” rating on Outerwall, had already expected rental volume to be “flattish” for 2015 and 2016. The price hikes have the potential “for a medium- to longer-term acceleration in market share shift away from Redbox,” he said.

Redbox’s price hikes come after the DVD-kiosk rental service had been facing renewals on its distribution deals with several studios — with Wold raising the possibility that studios would be seeking higher prices per disc.

Lionsgate recently renewed its pact with Redbox last month through Sept. 2016. In addition, Universal in September extended the term of its agreement with Redbox through Dec. 31, 2015. Last week, Paramount also renewed its Redbox deal through the end of 2015, under which Outerwall will issue 50,000 vested shares of its common stock to the studio, according to a regulatory filing.

Outerwall said it picked the new price points after several months of market testing. The fee increases represent the first time Redbox has raised prices on Blu-ray discs and videogames, and only the second time that it’s raised prices on DVDs (after it increase those from $1 to $1.20 in 2011).

In announcing the price change, Outerwall did not update its fourth quarter 2014 guidance, saying it would provide more info on the next quarterly earnings call in early February 2015. While the company acknowledged the hikes will dampen rental volume, it anticipates that the price increases will “help offset future declines in the physical rental market.”

“With new-release movies for $1.50 a day, Redbox remains the best value in new-release home entertainment,” Outerwall CEO Scott Di Valerio said in a statement. “The pricing adjustments announced today will allow Redbox to continue to offer consumers high-quality movies and games while making investments to enhance the customer experience.”

Redbox operates kiosks at more than 35,000 locations, including select Walgreens, Walmart and McDonald’s locations.

Separately, in October, Outerwall announced the shutdown of its video-streaming service joint venture with Verizon Communications, after the service proved unable to compete with Netflix and other SVOD offerings.

Popular on Variety

More Digital

  • Disney Plus Launches; Two Episodes of

    Two Episodes of 'The Mandalorian,' Other Originals to Drop This Week as Disney Plus Goes Live

    New episodes of Disney Plus original series dropped Tuesday as the streaming service went live in three countries, with second installments of “Star Wars” spinoff “The Mandalorian” and other shows set to become available just a few days later. Disney’s new direct-to-consumer service launched Tuesday in the U.S., Canada and the Netherlands, with company chief [...]

  • Instagram Reels

    Instagram Starts Testing New Stories Format Dubbed 'Reels' in Brazil

    First there was Vine, then Tiktok… and now Instagram Reels? In an attempt to stay relevant with music-loving video makers, Instagram started to test a new Stories format by that name in Brazil Tuesday. Reels, in essence, are a collection of creation tools that include the ability to add music to a video, as well [...]

  • Blockchain Mania

    AFM: Panel to Launch Blockchain Working Group for the Film Industry

    A group of film executives and tech industry entrepreneurs are to establish a working group seeking to plan how blockchain technology should be applied to the creative industries. The call will be made at the American Film Market on Tuesday in Santa Monica by Manuel Badel from Badel Media and Patrice Poujol from The Lumiere [...]

  • Magic Leap Raising Another Funding Round

    Magic Leap Is Raising Another Big Funding Round

    Augmented reality startup Magic Leap is raising even more money. The company is currently in the process of raising its Series E round of funding, a spokesperson told Variety on Monday. Magic Leap previously raised around $2.6 billion, including $280 million from NTT Docomo in April. “Magic Leap is in the midst of a significant [...]

  • hearst logo

    Hearst Magazines Unionizes With Writers Guild of America East

    The Writers Guild of America East has scored a major victory by unionizing Hearst Magazines’ editorial, video, design, photo and social staff across 24 digital and print brands. The New York-based WGA East, which has about 6,000 members in film, television, news and digital media, announced on Monday that a strong majority of the 500-member [...]

  • Apple AR Headset Coming in 2022:

    Apple Said to Prep AR Headset for 2022

    Apple’s augmented reality (AR) headset won’t be arriving on store shelves until at least 2022, according to a new The Information report. The iPhone maker reportedly updated a large number of employees about the project last month, filling the spacious Steve Jobs Theater on its Cupertino, Calif. campus with employees working on AR hardware. Apple [...]

  • Variety Launches New Video Series, 'Daily

    Variety Launches New Video Series, 'Daily Variety'

    Variety has launched a daily video series covering the business of entertainment. Hosted by Audrey Cleo Yap and executive produced by Eva Wong, “Daily Variety” will feature breaking news coverage and analysis from Variety’s award-winning staff as well as in-depth features and interviews with top industry professionals. Each bite-sized segment and featured clip will be [...]

More From Our Brands

Access exclusive content