Redbox free essay sample

Executive Summary This analysis will examine the business model and financial position of Coinstars subsidiary company, Redbox. It will focus on the current and expected future situation, as well as provide recommendations for the critical challenges of continued growth of the company’s market share in the DVD rental business. The DVD rental industry is rapidly changing due to the continuing advancement in developing video technology. For that reason, the recommendations include both the continue development and expansion of DVD rental kiosks as well as developing a web based service to continue to compete in the highly competitive movie rental industry. The recommended actions are as follows: * Increase the number and distribution of DVD rental kiosks through creating strategic partnerships * Develop a web-based service to offer customers the ability to watch movies from the internet * Strengthen partner relationships Mission/ Vision Statement Redbox shares every movie enthusiast passion in having a convenient way to access new movie titles at a very low price. We will write a custom essay sample on Redbox or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Redbox is driven to be a world class organization that delivers access to hundreds of DVD movie and game titles to its customers by incorporating technologies and generates a return to the shareholders in the excess in the cost of capital. Redbox uses automated retail kiosk that provides customers with access to DVD and game rentals 24 hours a day, providing unmatched services in the movie rental industry. General Environment Analysis (External Analysis) There are many different factors in the environment that influence Redbox Automated Retail. These factors include: general business ethics, United States copyright laws, the economic recession, unemployment, increased consumer debt levels, declining consumer confidence and spending, new technological advances, natural disasters, and content acquisition and license agreements. Although the previously listed factors each hold a certain degree of importance, the most relevant factors include new technological advances, content acquisition, and license agreements. The advancement in technology, such as digital access to movies via the internet, allows customers the convenience to access films directly from their home which weakens the consumer demand for DVD’s. Furthermore, content acquisition and licensing arrangements restrict the amount of titles that are available to Redbox resulting in litigation battles with large movie studios. Industry Analysis There are many important components in the movie rental industry. The structure of the industry is one that consists of a large number of big companies. Redbox competes in a highly competitive industry that is quickly advancing. Large competing companies such as Blockbuster and Netflix offer services through store chains and e-commerce websites. It would not be feasible for new smaller companies to enter the market. Redbox is no longer the only company providing automated kiosks services to customers. Blockbuster has recently invested in its own kiosk service, however Redbox continues to have a significantly advantage in the number of locations and price. The customer base consists of casual movie watchers from all demographics who have discretionary income to rent and buy movies. The large movie studios such as Universal Studios and 20th Century Fox have the ability to determine the product cost in this industry. Internal Analysis (Non-Financial) Redbox continued growth in the movie rental market depends upon a number of factors including: product, price, marketing, and distribution. Redbox provides its customers with over 22,400 automated movie rental kiosks with over 200 different movie titles to choose from. Each kiosk has a wide variety of movie genres which includes mainly new titles. (McGraw 20) In addition customers are subject to no late fees and have the option to purchase a movie at any time. The prices of DVD rentals are lower than its largest industry competitors, Blockbuster and Netflix. Redbox charged a rental fee of $1 per a day and typically sold previously rented DVD’s at $7 each. (McGraw 20) With a wide variety of titles and low prices available all across the nation, Redbox has demonstrated great success in its marketing communications. It’s marketing strategy includes strategically painted vending machines at reputable retail chains, and internet advertising (Coinstar). Redbox distributes its product by creating partnerships with chins such as Walgreens, Walmart, and McDonalds (McGraw 23). Redbox has demonstrated success of creating a competitive advantage in its product, price, marketing, and distribution in the movie rental industry. Financial Analysis Future Assumptions Over the next 10 years I believe that we will see a shift from the market for DVD rentals to an online digital service that will replace a large portion of movie rental market. The advancement in technologies will only increase the rate at which the digital market will grow. It makes sense for the company to continue to distribute its placement of kiosks and strengthen the relationship with its distribution channels. Redbox has an outstanding advantage in the brick and mortar rental stores and will continue to flourish in the near future while eliminating competition. However it is in the companies best interest to implement a strategy that will focus on developing a digital media that can compete online by obtaining license agreements, creative thinking, and customer satisfaction. Statement of Critical Challenges Although there are many different challenges that pose a threat to Redbox movie rentals, the most critical challenges are obtaining licensee agreements and developing technology to compete in a market that is headed towards streaming digital movies. The successes of competitors such as Netflix show how a movement towards online digital media services will continue to flourish in the near future. It is critical that Redbox enhances its role in online services so that it can continue to grow and compete. Strategic Recommendations