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How Much Of A Threat Is Redbox Really To Netflix?

22 Jul

A recent article in the Bloomberg Businessweek talked about how Redbox with its $1/movie kiosks was plotting a web strategy against Netflix. The $1/movie sure sounds like a sweet spot but can you guess just how many Netflixers are already under this magic number? We ran some quick stats across the FeedFliks userbase.

For just DVD rentals, only about 20% of FeedFliks members are at under a $1/movie.

That sure sounds like a big opportunity there but what happens if we factor in Netflix’s Instant Watch offering?  With this about 64% of FeedFliks members are already at under $1/movie.

Now, it doesn’t look like all that juicy of an opportunity with nearly two-thirds of all Netflixers already paying under $1/movie – and enjoying other benefits of Netflix like no late fees and a much wider collection of titles.  Thought these numbers were interesting and wanted to share them with all of you.

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4 responses to “How Much Of A Threat Is Redbox Really To Netflix?

  1. Jason Jones

    August 27, 2010 at 5:31 pm

    Your analysis reminds me of the old DVD-by-mail throttling issue. I would be interested in seeing a Netflix trend line of the FeedFlix user database that shows how that average cost per movie has changed over time. I bet the trend line falls every month as streaming becomes more popular. Doesn’t Netflix have to pay per stream? If they collect a fixed price per month ($8.99) but they pay a variable rate based on the number of streams consumed, their business model weakens as usage increases. Do they face the same throttling issue that they faced with the DVD-by-mail business? Do you think they will have to limit that number of streams per month if the avg cost per movie falls too low?

     
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