RedBox Succeeds With Blue Ocean

RedBox KioskFirst came Blockbuster movie rentals and its counterparts.

Then, as videos gave way to DVDs, Netflix reinvented movie rental with its monthly subscription service.  Its pitch was simple: DVDs delivered right to your door with no late fees.

Now, Netflix and others are evolving that model and delivering movies right to your computer or TV.

So how can a company succeed by making people drive to pick up their DVDs again?

RedBox has found a way, by finding Blue Ocean – a new way of thinking –  among the crowded Red Ocean movie rental industry.

In this case, RedBox knew there was an opportunity in DVD rentals outside of what the biggest players were doing today. The key was finding a competitive position that would meet an unmet need.

So RedBox started using Blue Ocean thinking for DVD rentals, just like Netflix did a few years ago.

RedBox is a series of self-serve kiosks located at very convenient locations like grocery stores, drug stores, etc.  You can grab a movie after you do your regular shopping.  A RedBox rental costs $1 – with no late fees – and you can return your DVD at any RedBox location.

RedBox took this Blue Ocean approach and changed the game based on some key consumer insights.

  1. Consumers don’t want to wait for their movie in the mail. Movies are as close as the nearest RedBox, located in the places people already frequent (so they seem even more convenient).
  2. Consumers don’t want to pay subscription fees. RedBox lets you rent on your own terms and timeline.
  3. Consumers don’t like late fees (confirming Netflix’s experience).

As an added bonus, RedBox lets you reserve your favorite movies at the most convenient location through their website.

RedBox results:  147% growth last year; 105% growth the year prior.

Now is a great time to think about your business and determine what you can do differently from your competition.  Costs to implement any changes are lower than they’ve been in years and the manpower and mindpower is available.

What Blue Ocean thinking can you apply to recreate your industry?



Filed under Competition, Innovation

3 responses to “RedBox Succeeds With Blue Ocean

  1. mtsavvy

    They are definitely applying blue ocean strategy and doing things different than Netflix. And according to the growth numbers it seems to be profitable. It should be as it is only a twist on the Blockbuster model with a much smaller footprint. Unmanned kiosk instead of bricks, mortar and staff. The beauty of the model for them is, while it says “no late fees”, it is still $1 for the initial rental period…which is one day…and then $1 per day for every day you have it out. Nice. That’s how Blockbuster made it’s money. Long duration rentals. That’s human nature. We forget to return library books, get our oil changed, pick up the drycleaning, etc. It’s a smart business model because of their understanding of consumer behavior.

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