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Didn’t Redbox Learn Anything From The Recent Netflix Debacle?

Submitted by on November 2, 2011 – 10:16 am4 Comments
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To all of the companies out there, please take note: Americans don’t want to pay anymore than they have to for optional services these days, especially when the companies providing them aren’t improving those services in any way when they implement new price changes.

That should be obvious. But we saw what happened earlier this year when Netflix announced a new pricing model that split up their DVD and streaming services and made it more expensive to use both. The fact that Netflix made those changes coupled with the fact that Netflix didn’t really add anything to either service saw more than a million subscribers cancel their subscriptions over the course of the last few months. So you would think that a rival company like Redbox would learn from that and work hard to avoid making the same mistake.

The key phrase in that sentence is “you would think.” Despite all of the trouble that Netflix has had recently, Redbox has gone ahead and announced that moving forward they will now be charging $1.20 per day for DVD rentals, a 20-cent increase from the “dollar-a-day” pricing model that made Redbox so popular in the first place. They’ve cited higher operational costs as well as a recent hike in debit card fees as reasons for the price increase, which is the first in the eight-year history of the company. They also announced that the price of Blu-Ray and video game rentals will remain the same for now but stated that these price changes to regular movies had to be made in order to keep the company afloat.

As a pretty loyal Redbox user, I can respect their reasons for increasing their prices. A few months ago, I argued that in spite of the Netflix price increase, I wasn’t upset because I still felt like Netflix is a great value for anyone who watches movies frequently. I could make the same argument for Redbox, too. Even at $1.20 a night, Redbox is providing an absolute steal. We used to have to pay upwards of five or six bucks a night for a Blockbuster rental, so a dollar and some change is a steal. However, I do take issue with the way Redbox has gone about implementing their price increase.

Rather than putting out a statement that sounds like one big “woe is us!” story, I would have liked to see them spin this price increase differently. Because they’re hiking up the price, how about selling us on it by telling us about the improvements they’re trying to make behind the scenes? Are they working to get a bigger sleection? Are they improving the Redbox machines? Are they making it easier to navigate their website? Surely, they’re doing something that could make us feel better about paying an extra 20 cents extra for movies. Tell us about it!

Instead, what we got was: “Our cost of operations is rising, so we’re passing on the buck to you!” It should go without saying that that is not the best way to approach customers. Would Redbox care if we could only afford to pay 80 cents a night because we just lost our job? Would they care if we could only pay $2 for a lost DVD because our car is in the shop? Would they care if we had to skip our weekly movie night to pay off some bills? No, they wouldn’t. Their response would be, “Give us our money…or you can’t have another movie.”

So, why are they trying to sell us on their price hike by doing the same thing? Ideally, Redbox should have handled this a little differently. Their prices had to go up sometime but there was a much better way to handle this situation. They should have learned a thing or two from Netflix. Instead, they repeated their mistake—to a degree; in the end, Netflix still caught a much bigger L—and left us feeling some type of way about their price increase. Which, as a result, makes us feel some type of way about using their service. So, to all the companies out there, take note: Handle your business better than Netflix and Redbox just did. Trust us, it’ll be worth it.

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