Redbox Follows Netflix's Lead, Raises DVD Prices

on August 17 2011 5:43 PM
RedBox
Redbox is offering Americans a one-day free movie rental on Thursday, Mar. 8 to commemorate the company passing its two billionth rental mark. Customers can enjoy a one-day free movie rental by using the promotional code, THANKS2U, found on the company's Facebook page. Reuters

Despite the wave of negative attention Netflix got for raising its prices, Redbox has decided to follow suit and raise the prices on its DVD rental service.

Redbox has announced a 20 percent price hike, bumping rentals from $1 to $1.20, in select states throughout the country. It has announced that hike in Portland, Oregon and Austin, Texas, as well as additional price testing in California and Florida.

The price hike isn't nearly as high as Netflix's 60 percent hike for its DVD subscription service, but it could still turn some customers off. There's no debating an extra $8.00 a month has more of an impact than a 20 cent increase from first glance, but based on usage it could add up.

The measures haven't been implemented nationwide yet, but the testing in multiple markets likely indicates a uniform price hike is on the way.

Even with the price hikes, Redbox still stands to gain disgruntled former Netflix customers, according to one analyst.

Piper Jaffray analyst Michael Olson said that 24 percent of those surveyed will use Redbox more, and 8 percent will quit Netflix completely to reply on Redbox.

Netflix's decision to increase the price of its DVD subscription plans drew an intensely negative reaction from a horde of customers. Quite a few claimed to dump the service and consider other options - something Redbox is hoping to cash in on.

Redbox, owned by Coinstar, offers Blu-ray movies, regular movies, and video games in its kiosks throughout the country. It recently announced revenue and profits were significantly up in the most recent quarterly earnings.