Monday, October 31, 2011

The Redbox price increase: a different story

In some instances, there are clear benefits to being the second to do something. In the instance of the recent Redbox price increase, Coinstar (the parent company of Redbox) benefited from Netflix's missteps.

Here are some differences in how Coinstar communicated its recent price increase:
  • Shifting of blame: Who better to blame than the pariah of the day -- banks? Coinstar said that "rising operating expenses, including new increases in debit card fees" was the main reason behind the rise in prices.
  • Relatively minimal percentage increase: Coinstar increased prices by 20 percent, compared to the up to 60 percent increase that Netflix imposed. Coinstar also kept daily rental prices intact for Blu-ray Discs and video games.
  • Smooth transition: From Oct. 31 to Nov. 30, the Redbox DVD rental price stays at $1.00. Additional rental days are $1.20.
While Coinstar's stock slumped 7 percent in the day following its price increase announcement, I doubt that there will be the same impact on business that Netflix has suffered.
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