External Environment Analysis For Redbox

1411 words - 6 pages

The company I have chosen to do the external environment scan is Redbox.
Redbox is in the movie rental business via self service kiosks. Redbox is wholly owned subsidiary of Coinstar Inc.

Laws and Regulations:

There are some specific laws and regulations under which the movie rental business like Redbox should operate. But due to the growing popularity of renting videos through mail, online and kiosks, most of these laws will probably have to change or modified to fit the new way of people renting and watching movies.

Age of Renters – This law for who can rent specific videos follow the same guidelines set by Motion Picture Association of America. These guidelines are based on ...view middle of the document...


It was a considerable technology jump in 2005, when Redbox began its use custom designed self service kiosks with interactive touch screen and sign, a robotic disk array system and web-linked electronic communications. Customers are now able to check real time inventory on the Redbox website and even able to reserve their movie before driving to the kiosk.

However, today renting and delivering movies over the Internet is largely getting popular. There are already players like Netflix which can stream movies through your latest TV and DVD players. Bigger players like Google and Apple are also actively pursuing this market which may mean that in a few years people may not be willing to drive to a kiosk and instead just rent it online at their convenience. Also, these online services will get more affordable and popular as more players enter this market.


Redbox has more than 22,000 kiosks across the US in fast food restaurants, pharmacies, grocery stores and convenience stores. This is a great advantage has there is always a heavy foot traffic to these locations and they belong to all ages, ethnic cultures, professions, gender etc. The kiosks are positioned to encourage shoppers to pick up DVDs on their way out. The customers and employees are spread pretty evenly across the country so the demographics change may not have a huge impact.

Increase in Population may likely generate additional revenue with increase in customer base. Each kiosk generates around 45,000$ in revenue each year. Increasing the number of kiosks at good locations will increase the number of customers and profitability for Redbox.

Social Issues

Some people have promoted the idea that movie rental services like Redbox cannibalize the market for DVD sales and theater going audience. Movies are no longer considered an event like before in this industry has people know that within a matter of 2-3 months the movie is going to be available on DVD. But despite this the truth is that companies like Redbox help to grow overall interest in and purchase of DVD entertainment. According to customer research, a majority of Redbox renters report their typical DVD purchase is result of having previously rented and enjoyed the title. The survey also concluded that 42% of Redbox’s active customer base is renting more DVDs than before Redbox entered this industry. This model can be win-win situation for Redbox, movie studios and most importantly the customers.

There are some other issues like Piracy which prevail in the entertainment industry which estimated cost the US economy $20 billion per year. Piracy prevents the people in this industry to not get their full royalty for their intellectual talents.


The main suppliers for the Redbox and other movie rental business are the movie production houses which own the copyrights of the movies produced by them. Three major studio houses 20th Century Fox, Warner Brox and Universal...

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