After a brutal 2020, in which a pandemic downturn in the major studio's movie-release pipeline further eroded its 18-year-old DVD and Blu-ray kiosk rental business, Redbox islaunching investors(opens in new tab)in an ambitious plan to transition its still loyal base of around 40 million customers into a vital, cross-platform niche within the competitive OTT business.
Outlining its strategy at a virtual meeting on July 14, Redbox provided further details on its initial public offering through a special purpose acquisition (SPAC) company, Seaport Global Acquisition Corp., which will value Redbox at around US$ $693 million and will leave the company. with approximately $209 million in cash when the deal closes at the end of the third quarter.
Private equity firm Apollo Global Management, which bought Outerwall's DVD rental business in 2016 and took it private, will transfer 100% of its Redbox equity to the initial public offering and receive 59% of traded RDBX shares on Nasdaq professionally. base form.
Sell the deal at the Wednesday meeting(opens in new tab)Joining the equity analysts was Redbox CEO Galen Smith, who rose to the role of chief executive after serving as Outerwall's CFO during Apollo's 2016 purchase of the company.
You'd think that a brick-and-mortar kiosk business, already in decline when the pandemic saw revenue plummet 34% in 2020 to $546 million, might not have much of a storytelling. But the SPAC route relieves Redbox of some of the liability associated with forward-looking statements, giving Smith and his management team some room to dream.
They believe they can double Redbox's revenue to more than $1.1 billion by 2023 by competing with the likes of Amazon and Roku and building an established brand and customer base — advantages that "war wars" startups lacked . streaming" much better financed like Quibi.
And of course, a user base of around 40 million doesn't equate to the scale of Netflix's 200+ million subscribers or the scale of Disney Plus's 100+ million. But it's on par with ViacomCBS and the newly created Warner Bros. Discovery.
So why not?
"We also have in our 18+ year history this incredibly deep set of customer data," Smith told equity analysts. "We know what our consumers love to see. We know which actors they love. We know where they shop. We know when they shop. We know a lot about our consumers and how they interact with retail and our various services. And that gives us the opportunity to give give them this incredibly personalized experience."
Redbox still operates nearly 40,000 point-of-sale record rental kiosks at nearly 150 retail partners across the US. It over-indexes in sparsely populated markets with lower costs of living (see company presentation chart below).
It's an impressive physical footprint, larger by number of stores in the United States than McDonalds and Starbucks combined.
Notably, 71% of the Redbox kiosk's customer base of some 40 million users describe themselves as "bargain hunters," willing to drive down the street to rent a $2 disc instead of paying six dollars for the same movie in a digital transactional service.
Most Redbox kiosks are at chains like Walmart, Dollar General and Dollar Tree. These are customers who think more than twice about paying $14.99 a month for Netflix or HBO Max.
Redbox's loyalty program has 39 million members, who exchange all kinds of personal data for discounts at kiosks. Redbox also builds an email list of around 46 million potential digital customers.
Also notable: 70% of regular Redbox customers can be described as "late adopters".
“While it seems like Netflix can be ubiquitous and everyone is streaming, the reality is that not everyone has made this full shift to digital,” said Jason Kwong, a former WarnerMedia, Netflix and FullScreen executive who serves as chief strategy officer. and digital director. 🇧🇷 for redbox" Now some people are signing up for Netflix, but not everybody has really cut the cord and switched completely. Especially as it relates to late adopters, which again gives Redbox that opportunity because that's the customer for where are we going."
Redbox is already in the streaming business.
The company says the Redbox app has been downloaded 43 million times, achieving an impressive 4.8 rating from Apple App Store customers.
In the living room, the Redbox app is compatible with Roku, Android TV, Xbox game consoles, as well as the native operating systems of Samsung, LG and Vizio smart TVs. It is also compatible with iOS and Android in the world of mobile devices. PlayStation support is coming soon. The only notable place you can't get the Redbox app is on the Amazon Fire TV.
The app started simply as a mechanism for customers to find and reserve the physical units they were looking for at the nearest available kiosks. But Redbox has been adding components to the app over time.
Three years ago, Redbox added a transactional video-on-demand option for its movie renters, allowing them to spend about $5.99 for the convenience of not having to drive, bike or walk to a newsstand. Revenue from "TVOD" increased to around $35 million in 2020, offsetting some of the blood loss from the newsstand business.
Last year, red boxadded an AVOD service, Redbox Free On Demand, with over 2,000 movie and TV show titles. just this week,advertised red boxoffers to license films from Shout! Factory, Legendary Television, Magnolia Pictures and Relativity Media.
Shortly before the AVOD platform, it also launched Redbox Free Live TV, a collection of over 100 linear channels including Crackle, Popcornflix, Tastemade, Unsolved Mysteries, Cheddar News, Divorce Court and Pac-12 Network.
These ad-supported streaming efforts are being monetized by a programmatic sales acumen that Kwong admits is still in the early stages of development.
"Getting the attention of a lot of programmatic players becomes difficult until you really hit a certain volume," he said.
And Redbox's in-house advanced advertising team is still small. The majority of ad sales efforts are handled by a third-party provider, Screenvision. The hope is to build these advanced advertising capabilities out of the SPAC transaction bounty.
"We also expect to continue to build as part of this transaction more of our domestic direct sales as well," Kwong said.
Redbox's ad-supported streaming audience is growing. It has over 1 million monthly active users, with engagement hours of 960% year-over-year in June.
Away from the advertising business, Redbox is also branching out into the "channels" business, offering wholesale aggregation of subscription streaming services including HBO Max, Discovery Plus, Paramount Plus, Starz and Showtime. Like Amazon, Apple and Roku, Redbox shares any subscription rewards sold on its platform and controls customer billing and other data-laden aspects of the overall customer relationship.
And then there's Redbox Entertainment, the company's film acquisition arm, formed several years ago to make up for "gaps" in major studios' release schedules that could hurt newsstand business.
The division has released 21 titles to date, not just within the release window chain of its own platforms, but across the digital spectrum from theatrical release, as well as TVOD, SVOD and AVOD competitors. Notable releases included the poorly reviewed biopiccapone, starring Tom Hardy, as well as crime dramarunning with the devil, starring Nicolas Cage and Laurence Fishburne.
Redbox executives envision that this division will possibly oversee production of original programs for Redbox's various platforms in the future.
"The beauty of this digital transformation is that we're already on the road," said Smith. "This is not something that is yet to come, it is something that is already underway and we will continue to leverage our legacy kiosk business to continue to grow as we go forward."
Daniel Frankel
Daniel Frankel is the Editor-in-Chief of Next TV, a vertical internet publication focused on the streaming video business. A Los Angeles-based writer and editor who has covered the media and technology industries for over two decades, Daniel has worked on staff at publications such as E! In line,electronic media,Mediaweek,Variety,PaidContent and GigaOm. You can start living a healthier life, with more wealth and prosperity,following daniel on twitter today!
FAQs
Is Redbox going out of business? ›
The deal bails out Redbox from a potential bankruptcy. As of March 31, it had $349.3 million in debt, against just $9.8 million in cash. Without the deal, Redbox has said, there would be “substantial doubt” about its ability to remain a going concern.
Is Redbox still successful? ›But Redbox is back. It's built its own streaming operation. And the company's stock is somewhat inexplicably one of the hottest on Wall Street, even as Netflix (NFLX) has plummeted. Shares of Redbox are up more than 20% this year, about 55% in the past month and nearly 200% in the past three months.
Is Redbox still a thing 2022? ›Flash forward to 2022, and Redbox went public again last October via a merger with a special purpose acquisition vehicle (SPAC) called Seaport Global at a valuation of almost $700 million.
How much does it cost to buy a Redbox franchise? ›redbox+ charges a franchise fee of $49,500. They also offer a discount for veterans ($25,000 Towards Store Build-Out).
What does Redbox do if you never return a movie? ›If you don't return the rental, you'll be charged at the end of its maximum rental period.
Is Redbox a good investment? ›RDBX stock has received a Strong Buy consensus based on 4 unanimous Buy ratings. Further, Redbox's stock forecast on TipRanks shows that it has significant upside potential from current price levels. To be precise, the average Redbox price target of $24 indicates 269.8% upside potential to current levels.
How long can you keep a Redbox for before you own it? ›For example, if a DVD's or Blu-ray™ disc daily rental charge is $2.25 and its maximum charge is $36.00, then the maximum rental period for that DVD (before you own it and owe $38.25, plus tax (except for jurisdictions that do not require sales tax to be charged or collected)) is 17 days.
How much does Redbox charge a month? ›That's only 84¢ a month!
Cancel anytime at redbox.com/account; no refunds unless canceled within first 30 days with no benefits used.
But if you relied on Redbox kiosks as your place to rent or even buy new PlayStation, Xbox, or Switch titles, you won't be able to anymore. In a statement, Redbox says it is “permanently transitioning out of the games business” to focus exclusively on movies.
When did Netflix stop mailing DVDs? ›Check out the latest Netflix earnings call transcript. Netflix actually split its DVD service off from its streaming service back in 2011 and it now operates under its own website, dvd.netflix.com.
How much does the average Redbox make? ›
Redbox pays $56,260 on average per year, or $27.05 an hour in the United States. However, there's a significant range between what the company pays the top 10 percent and the bottom 10 percent of earners.
Why did Redbox Instant fail? ›Red box instant streaming service was underfunded from the start. The declining rental business and a weak streaming catalog made failure inevitable.
How much debt does Redbox have? ›The most worrying is the company's debt. Redbox reports $301 million in long-term debt among other liabilities.
Can I buy a Redbox kiosk? ›Contact Redbox and request a kiosk application. You can reach Redbox on the company's website --- click "Contact Redbox" for an online form. You may also contact the company by email at questions@redbox.com or by phone at 866-733-2693. Redbox sends an application form to you.
How do I become a vendor for Redbox? ›Contact Redbox Directly
The best way to pursue a distributor relationship is by making direct contact through the email form on their website. You also have the option to call 1-866-REDBOX3. However, they might tell you to contact via email and then to wait for a response.
Redbox Automated Retail LLC was initially started by the McDonald's Corporation business development team. Originally the kiosks sold convenience store products under the name Ticktok Easy Shop, however in late 2003 McDonald's ended its use of the kiosks for these products.
What happens if you keep a Redbox DVD? ›“For each day you keep a rental, you'll be charged the nightly fee + tax. You have 25 days to return the movie before the system automatically charges you the purchase price of the disc ($25 + tax for standard DVDs and $34.50 + tax for Blu-ray™ Discs), and the movie is yours to keep.”
How many movies can you rent at Redbox at one time? ›(Note: You can return it to any Redbox kiosk in the United States, not just the one where you rented it.) You are eligible to rent three different movies the first time you use a Redbox kiosk; after you've used it once, you can rent five different movies at a time. You pay for the movie by using a credit card.
What's the most Redbox can charge you? ›If you hold onto your disc for the maximum rental period (almost everywhere, it's 17 days for movies and 23 days for games), you'll be charged the maximum charge and the disc is yours to keep. In most areas, those fees are $25 + tax for DVDs, $34 + tax for Blu-ray™ Discs and $69 + tax for video games.
Why is Redbox stock dropping? ›Shares of movie-rental business Redbox Entertainment Inc. were falling Wednesday after the company reached an agreement to be acquired by Chicken Soup for the Soul Entertainment Inc. in an all-stock deal that implies a Redbox valuation below $1 a share.
Should I buy RDBX stock? ›
There are currently 1 sell rating, 2 hold ratings and 1 buy rating for the stock. The consensus among Wall Street equities research analysts is that investors should "hold" RDBX shares.
Who still uses Redbox? ›A bulk of Redbox kiosks are located in chains including Walmart, Dollar General and Dollar Tree. These are customers who think more than twice about paying $14.99 a month for Netflix or HBO Max. Redbox's loyalty program touts 39 million members, who trade all sorts of personal data for discounts at kiosks.
What happens if I rent a Redbox after 9PM? ›The cutoff for Redbox return time 9:00pm local time. If you do not return the disc by 9, you will be charged for an extra rental day.
What if I rent Redbox after 9PM? ›When you return it, the rental is over. If it's before 9PM, you are only charged for the day. IF it's after 9 PM on the next day, then you are charged an additional day.
Can red boxes be returned anywhere? ›Their convenient rent-and-return-anywhere® policy means you can return your discs to any Redbox location in the country. For quick pickup, and to make sure you get the movie or game you want, you can reserve your rentals ahead of time.
Are Redbox channels free? ›The Redbox Free Live TV service can be accessed through the Redbox streaming app for free on Roku, Samsung TVs, LG TVs, VIZIO TVs, and many others.
How long is a one day rental at Redbox? ›Redbox clearly states that the discs are due by next day 9pm. For someone picking the disc on Friday 11:59 PM, the disc would be due on Saturday 9 PM since Saturday is the next day. For someone who waits for 2 more minutes and picking the disc on Saturday 00:01 am, the disc would be due by Sunday 9 PM.
Does Redbox have free TV? ›Get everything Redbox has to offer without leaving your couch. Plus, now you can watch Free On Demand & Free Live TV anytime you want.
How can I get a free Redbox rental? ›Text VALPAK, EMAIL, FREEBIE, PUSH, MOVIE, MOVIENIGHT, MOVIE TIME, or DEAL to 727272 and you'll get back a unique code that you can use to get a free 1-night DVD rental. The code can also be used for $1.50 off a Blu-ray or game rental.
Does Redbox give you a free rental on your birthday? ›🎂 Don't miss all the free birthday food available each year! The new Redbox birthday freebie is tied to their equally new loyalty program. Simply sign up online and you'll instantly get a free DVD rental. You'll also get a free 1-night DVD rental during your birthday month.
Why is PlayStation Store not renting movies anymore? ›
We strive to provide the best entertainment experience for PlayStation fans, and that means evolving our offerings as customer needs change. We've seen tremendous growth from PlayStation fans using subscription-based and ad-based entertainment streaming services on our consoles. This shouldn't be a surprise to anyone.
Will Netflix stop mailing DVDs? ›It's a small pleasure that Konkle and other still-dedicated DVD subscribers enjoy but it's not clear for how much longer. Netflix declined to comment for this story but during a 2018 media event, co-founder and co-CEO of Netflix Reed Hastings suggested the DVD-by-mail service might close around 2023.
Are DVDs going away? ›DVDs and Blu-ray discs aren't gone just yet. They still influence the media that studios produce and how they sell it. Filmmakers need to worry about the content being released to DVD and Blu-ray.
Why are DVDs not popular anymore? ›Instead, a combination of the Great Recession, a rise in customers buying on-demand and digital copies of films and the launch of streaming services is what has caused DVD sales to decline more than 86% in the last 13 years. And that decline could get worse as more streaming services enter the market.
How many Redbox points do you need for a free rental? ›Redeem 1,500 points for a FREE 1-night DVD rental; 1,750 points for a FREE 1-night Blu-ray rental at the Kiosk. Subject to Redbox Perks Terms and Conditions.
How does Redbox make a profit? ›Redbox's legacy business
The company gets revenue from the fees charged to rent or purchase a movie, including the roughly $2 a night that customers are charged to rent, plus late fees if they don't return it by 9 pm the next day.
No problem. For each day you keep a rental, you'll be charged for another rental period + applicable tax. If you hold onto your disc for the maximum rental period (almost everywhere, it's 17 days for movies and 23 days for games), you'll be charged the maximum charge and the disc is yours to keep.
Why is Redbox stock going up? ›Redbox shares have rocketed in recent days after their announced merger agreement with Chicken Soup For The Soul. Despite an implied deal price under $1 for Redbox, shares surged as traders have squeezed shorts attempting to arbitrage the merger.
Is Redbox on the decline? ›According to Digital Entertainment Group, overall rentals of DVD and Blu-ray titles declined just over 21% in the U.S. in 2021 for the entire domestic video business. Redbox ended 2021 with 38,379 rental kiosks in 32,586 locations, down from 40,026 kiosks in 33,661 locations in 2020.
Is Redbox the next meme stock? ›Having gained more than 400% since mid-May, Redbox's (RDBX) - Get Free Report stock has caught the attention of retail investors as a potential short-squeeze opportunity. Social media buzz and Wall Street bearishness has led to RDBX being labeled the newest meme stock.
How much does Netflix owe in debt? ›
Netflix's total debt stood at $14.5 billion at the end of March. The company does have around $6 billion in cash balancing that out, but at any given time it also has billions in short-term content liabilities it must pay. Netflix paid $188 million in interest during the first quarter, which annualizes to $752 million.
What is Netflix's current debt? ›...
Compare NFLX With Other Stocks.
| Netflix Annual Long Term Debt (Millions of US $) | |
|---|---|
| 2019 | $14,759 |
| 2018 | $10,360 |
| 2017 | $6,499 |
| 2016 | $3,364 |
Each item you rent from a Redbox kiosk has a minimum rental period of one day. That one day minimum rental period is measured from the time you first receive your rental through 9:00 p.m. the next day – unless we tell you differently at the kiosk or otherwise before you rent.
How is Redbox doing financially? ›A DVD rental dinosaur that was founded 20 years ago, Redbox has been riding the struggle bus for a while now, collapsing during COVID-19. In 2021, the company experienced $140.8 million in losses, had $289 million in sales (down from $546.2 million in 2020) and cash flow went negative to $15 million.
How many people still use Redbox? ›Outside of your Walmart or Walgreens — or 40,000 other U.S. retail locations — there's a Redbox kiosk where you can rent a new-release movie on DVD, Blu-ray or 4K for a few dollars a night.
Why did Redbox stop? ›In a recent tweet, Redbox customer service explained the decision to stop renting games was made after evaluating "changes in the industry," which led it to shift its full focus to physical movies, which is the bulk of its business anyway.
Can you rip Redbox DVDs? ›Generally speaking, the DVD movies rented from Redbox are encrypted by copy protection. Most free DVD rippers in the market (like HandBrake, DVD Shrink) cannot settle DVD copy protection removal. Therefore, you need to find a more powerful program to copy/rip Redbox DVD movies without errors.
Is Redbox a shorted stock? ›34.13% of Redbox Entertainment's shares are currently sold short.
Which is better Netflix or Redbox? ›Netflix has way more titles than Redbox. It's said they have more than 100,000 titles on DVD and Blu-ray, so you can easily rent that hard-to-find movie you'd like to see again. Plus they have TV shows in their title library, which is something Redbox doesn't have.
Who is buying Redbox? ›Chicken Soup for the Soul Entertainment acquired Redbox in May for $50 million in stock and the assumption of $325 million in debt. The guy who signed off on the deal, Chicken Soup for the Soul CEO and owner Bill Rouhana, isn't exactly high on the current state of Redbox's DVD rental-kiosk business.