Very simply, and this is my prediction. Redbox has gained a great deal of market share in my area and, from what I hear, in many other areas. Naturally, Netflix will want to quash this company and increase their base. The next natural business step for Netflix, better internet streaming aside, would be to setup their own kiosks.
This would allow them a double pronged approach to customer acquisition and allow more convenience and flexibility for their mail order customers. Imagine that some friends called and they are coming over in an hour. That's certainly not enough time to return your netflix movies and wait for knew ones, so you run down to your netflix box, return them, and rent new one right there!
The Argument: I've heard some argue that not only will Netflix become outdated, but so will the Redbox's as everyone is clearly moving to internet streaming. This is false, for now, for three huge reasons.
- The Internet infrastructure isn't ready to handle full fledged movie streaming. Streaming Millions of Blu Rays would prove to strenuous on the current infrastructure.
- Digital media rights and anti-piracy technology isn't quite where it needs to be yet.
- There are still people using broadcast television, there will most certainly be people who continue to rent physical movies. Some because they don't want the monthly bill, others because they just don't want to invest in the equipment for their home. For a guy who rents maybe one movie a month and uses dial up Internet, it would be silly to triple his Internet bill and pay a monthly subscription just to watch a movie a month.
So there you have it. Eventually Netflix will unveil its own rental boxes to be incorporated with their mail service and there will be a new rental war. Let us not forget that Blockbuster will probably try to come in swinging but they are kind of the Circuit City of the movie rental business. A formed giant fallen from glory. Maybe this is what they need to rekindle the name?
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