×
You will be redirected back to your article in seconds

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.

More Digital

  • Nancy Pelosi

    Facebook on Defensive Over Fake Pelosi Video

    Facebook faced growing criticism this week over its decision not to remove a video that was doctored to suggest that House Speaker Nancy Pelosi was intoxicated during a recent public event. The video, which has been viewed more than 2.5 million times, had been slowed down notably, giving the impression that Pelosi was slurring her [...]

  • Little-Black-Mirror-Maia-Mitchell

    Netflix Launching 'Little Black Mirror' Video Series Starring Maia Mitchell, Lele Pons, Rudy Mancuso, Juanpa Zurita and More

    To promote next month’s premiere of “Black Mirror” season 5, Netflix is launching a short video series — “Little Black Mirror,” with a cast that includes an ensemble of Latinx social-media stars. The three “mini-stories,” aimed at Spanish-speaking audiences, are inspired by the tech-dystopian universe of Charlie Brooker and Annabel Jones’ anthology series. “Little Black [...]

  • Twitter

    Twitter Permanently Bans Anti-Trump Krassenstein Brothers, Who Deny They Broke Platform's Rules

    Twitter permanently suspended the accounts of Ed and Brian Krassenstein — progressive political activists famous for trolling Donald Trump and his supporters — with the company alleging the brothers used bogus accounts to amplify their reach on the platform. “The Twitter Rules apply to everyone,” a Twitter rep said in a statement. “Operating multiple fake [...]

  • Snapchat

    Snap in Talks to License Music to Let Snapchat Users Embed Songs in Posts

    Snap wants to up Snapchat’s music game. The company has been in negotiations with music companies including the big three — Sony Music Entertainment, Universal Music Group and Warner Music Group — to license song catalogs for the Snapchat app, according to two industry sources familiar with the talks, confirming a Wall Street Journal report. [...]

  • T-mobile - Netflix - John Legere

    T-Mobile Passes Netflix Price Hike Through to Subscribers

    T-Mobile is getting ready to raise prices for subscribers who have taken advantage of its “Netflix On Us” promotion: The mobile carrier will begin charging existing customers who have participated in the promotion an additional $2 per month to account for Netflix’s recent price increase. Consumers will see their bill go up starting on 6/2. [...]

  • Oona King

    Snap Hires Google Exec Oona King as First VP of Diversity and Inclusion

    Snap continues to fill out the ranks of its revamped leadership team: The Snapchat parent tapped Oona King, most recently Google’s director of diversity strategy and a former member of British Parliament with the Labour Party, as its first VP of diversity and inclusion. King, who starts at Snap on June 11, is also the [...]

More From Our Brands

Access exclusive content