Red invasion

If you’ve seen more and more Redbox kiosks around town, it isn’t your imagination.

The DVD rental company has more than doubled the number of automated movie rental stations it has in Richmond over the past year. There are currently 101 Redbox locations in Richmond, up from 37 a year ago, according to information provided by the company.

Nationwide the company has 21,000 locations, up from 12,000 a year ago.

The company rents DVDs for $1 a night and dispenses the disks at kiosks located inside or outside of stores. Locally the kiosks can be found at 7-Eleven, Walgreens, Food Lion, Kroger and Walmart.

Redbox rents out more than 1 million movies a day and shares a cut of the revenue with its retail partners in exchange for the physical space, according to a Redbox spokesperson.

But Redbox is facing a major stumbling block: Hollywood studios that have withheld releasing videos to Redbox because they say the company’s cheap rentals are cutting deeply into in-store DVD sales.

Coinstar, the parent company of Redbox, has taken at least three studios to court over the matter, which you can read more about here. Redbox has attempted to keep the movies in stock by buying them in bulk from big box stores such as Target and Walmart, but that practice has been halted after the studios put pressure on the retailers to limit sales, according to the amended lawsuit filings.

In a recent article in the Wall Street Journal, Redbox President Mitch Lowe was asked about the future of the company as well as the criticisms being launched by the big Hollywood studios:

WSJ: DVD sales are set to decline again this year after a 9% drop last year. How much responsibility do you take for that?

Mr. Lowe: [Studio executives say] 80% of the decline in DVD sales is due to the economy. That leaves the 20% which would be Redbox and all the other factors. If you are a standard-def DVD owner, not only is the economy affecting your purchasing, but you’re also concerned about Blu-ray, and (thinking) ‘Should I wait? Should I buy?’

On top of that, you have peoples’ libraries. Almost everybody I know has bought almost all the kind of classics and all the things they’ve always wanted to own. Then maybe on top of that you put Redbox. We believe that we are a very small portion of it.

Redbox is currently planning to expand and offer video game rental as well. You can read more about that here.

The rapid success of Redbox is being emulated by competitor Blockbuster, which has begun rolling out its own kiosk.

Blockbuster announced in September that it would close 40 percent of its stores nationwide.  The retail rental chain has struggled in recent years, while Redbox and Netflix, which delivers DVD rentals by mail and streaming over the web, have grown in popularity.