Rebbox, the little start up that is making a huge dent in the DVD rental system, is an interesting little beast. It turns out that they don’t buy their DVD’s directly from the studios. No, they will buy up to 40% of their new releases right from big box retailers like Target, Walmart, Best Buy, etc.
Apparently the $1 a day rental fee Redbox charges is enough to recoup the cost of just paying retail for the discs fast enough that Redbox owners just buy the discs locally. Also this insures availability of rentals the same day the discs hit the retail stores. Something the Studios have prevented services such as NetFlix from doing in the past.
Well apparently Target and Walmart have had enough of “subsidizing” the profits of the little unmanned rental service. So they are limiting sales of new release DVDs to only five per customer.
This they think will prevent the people who fill up the Redbox kiosks from being able to buy enough new release DVDs to fill their inventory. I think it will just force Redbox owners to shop online thus taking all those dollars out of the local economy.
I don’t know but this just seems like a dumb move to me. It’s not like Redbox rentals and Walmart sales compete with each other. If I were in Target’s position I’d make a deal with Redbox to let them buy their movies there, but then put coupons in with the DVDs Redbox rents. Then if you rent a movie, you decide you want to own it, you have a coupon in your hand for $1 off at Target.
See now, that is what they used to call synergy. What Walmart and Target are doing now is cutting off their hand to spite their face.
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