Redbox charges $1.50 to rent a new release on DVD, $2 on blu ray.
Or you can stream it from redbox for $5 for standard definition, or $6 for high definition.
Prices on Amazon prime are the same, $5 for SD and $6 for HD.
The redbox kiosk has higher upkeep and maintenance costs. Physically printing DVDs has higher costs. Plus DVDs are easier to make a digital copy of than a stream so piracy is easier. Plus you can only rent out one DVD at a time, with streaming you can stream one copy to a million customers.
So why is streaming 3-4x more expensive than physical media despite the overhead of physical media being higher?
Even family video, I think only charges $3 for a new release.
I think it’s because the first-sale doctrine means that if you buy a copy of a movie on DVD, you can rent it out for whatever the market can bear, for as long as you want (and as long as the disc remains playable). Meanwhile if you want to offer the movie for streaming, you need to negotiate with the rights owner and they will probably want a cut of the revenues for each and every rental.
The movie studios are going to sell their physical movies for $15 to $30 or so. The overwhelming majority are going to normal users and the movie industry has found that a price point in this vicinity maximizes profit (very few people would buy a 50 dvd). So if Redbox purchases these it can rent one while it costs less than .50 or so per use to buy the physical copy. But for streaming movies the movie studios want a lot more money for each streaming use of new movies so the prices are higher accordingly.
Thats a good point, if you stream a movie you have to pay a royalty each time it is streamed. I don’t know if redbox owes money to the studio each time someone rents a particular movie, or if they own the disk at that point and can rent it 1,000 times after buying it for $20.
Plus, don’t forget: the owner doesn’t usually charge what it takes to make a certain % profit (revenue - expenses) - it charges what the market will bear. If enough people are willing to pay an extra $3 or $4 for the convenience of not leaving their home to go get a movie, that’s what they’ll charge. Oversimplified, of course, competition, economies of scale, etc.
I’m pretty sure this is not true. Most standard home-use DVD say they are for private non-commercial use. They cannot be rented. Red Box and other rental places have to purchase different DVDs. Well they may physically be the same type of DVDs, but they need a different license.
I know publishers were trying to limit the number of times a library could lend an electronic book. Movie studios may do the same thing with Red Box.
That restricts how the movie can be played. Like, a movie theater cannot go get a retail DVD and start selling tickets to the public. But the DVD itself can be sold or rented however the owner pleases, and the new owner/renter is free to use it privately and non-commercially, whether the copyright holder likes it or not.
Lending an electronic book creates a new copy. Renting a physical DVD does not.
Not necessarily true. Had a friend who owned a DVD rental shop. He paid well above retail price for DVDs from the publisher for those he rented out. Typically he’d pay $120 or so for a ‘rental intended’ movie instead of the standard $15 or so. With that extra fee he got a license that allowed him to rent it out.
It’s possible he was charged the higher rate because it was an early release not yet available to consumers. As noted, the first sale doctrine prohibits the copyright holder from dictating what the owner of a physical copy (either a DVD, VHS, or book) can do with the copy, including renting it out for profit. As a result, in the early days of video rentals, the studios only initially sold video tapes directly to rental stores, and only later selling them to the consumer market. More precisely, studios would sell the initial videos at markup at $50-100 to the video rental stores, who had the choice of buying these at the higher price or wait months for the release of consumer DVDs at $10-15. I used to work with someone whose uncle ran a mom-and-pop video $1 rental store, and they purportedly kept prices low by stocking only videos that were already available to the general public.
The reason it costs more to stream is because people are willing to pay for the convenience. Even if RedBox was free, I probably would prefer to rent a streaming movie. Spending $4-5 to stream a movie is worth it since I can decide from the comfort of home at the moment we want to watch the movie. With RedBox (and video stores), you have to go to the location, select from their limited stock, and then return the movie the next day. That’s not too onerous of a task, but it’s less convenient than picking a streaming movie. To spend an extra $3-4 for the streaming convenience is worth it to a lot of people, so the studio prices the rental accordingly.
Probably the other side of this question is why RedBox doesn’t charge more for rentals. As streaming has shown, people are willing to spend $4-6 to watch a movie. But if RedBox increased their prices, they’d proportionally lose more customers to streaming and likely make less profit.
It costs more because people are willing to pay more. It has no connection to the cost to provide it, it has to do with the utility to the consumer. It costs more because it’s worth more.
This comes up in basically every thread where video rental economics are discussed.
It’s not true. You don’t need a special license to rent a physical copy of a movie in the US, and you never have.
Back in the days of VHS rentals, it was common that early release copies intended for the rental market were $100+, but there was nothing legally to stop individuals from buying those, or to stop rental shops from buying the cheaper ones that eventually came out (they’d have to wait a while, though).
Large video rental companies do generally have contracts with movie studios that give a slice of each rental to studios, and in return get cheap “rental version” DVDs/Blurays that often don’t have all the extras. But that’s all voluntary. Nothing in the law stops you from going down to Walmart, buying a DVD, and renting it to someone.
You can absolutely rent out a retail copy of a movie. In fact, Redbox and Disney are in a legal battle because Redbox has been buying combo packs of Disney films (DVD/BR/Digital) and renting out the discs while selling the digital key. The discs aren’t the focus of the issue, rather Disney is trying to block the sale of the digital key on some (in my opinion) rather nebulous grounds.
I think the best answer to the OP’s question is that a streaming movie is more valuable to the customer than a disc.
I don’t have to plan ahead. I don’t have to remember to return anything. I don’t even have to get up off the couch! That could easily be worth an extra $4-5.
There’s also some market segmentation going on. More wealthy customers who are willing to pay more for convenience are streaming. Poorer customers who are more price-sensitive are renting from Redbox. My experience is that Redbox locations are usually at mid-market and low-market grocery stores, not high-end ones.
Sometimes they’re not even physically the same. Several times when I’ve clicked on the “extras” link of a Netflix-provided DVD I get a notice to “buy the DVD to enjoy this feature.”
This is true, but there are multiple services to stream a movie for rent.
Amazon prime, redbox on demand, Dish on Demand, fandango now, vudu, google play, etc.
Shouldn’t market forces be forcing at least one of these providers to offer cheap streaming to outsell the others? All charge about the same price, around $4-6 to stream a movie while redbox physical discs are still only $1.50.
The hardware to stream is the same for everyone. At the moment the bandwidth is the same also. What is different is the licensing fees. How is the low end provider going to undercut a big guy on that?
Also, the cost per item streamed for something like Netflix depends on how much you stream. Someone watching a movie a night is paying less per movie than someone who watches one per week.
But why are licensing fees so much higher for streaming services? I think it costs a couple pennies in bandwidth to stream a movie. The consumer already owns all the equipment to stream (smart TV, roku, etc). I assume the servers to upload movies are fairly inexpensive too.
I assume after factoring out the costs of the physical disks, upkeep on the redbox itself, etc the licensing fees at a redbox kiosk are maybe $0.50 or less. That is a guess.
So if it costs $0.50 in licensing fees to rent a physical DVD, why does it cost $4+ in licensing fees to stream a movie? The other costs of streaming are pretty low.
So either the licensing costs are far far higher for streaming (despite the fact that physical disks are easier to pirate and copy), or all the providers are paying the same licensing fees of maybe $0.50, but tacking an extra $4 onto the price so it costs $5 to stream.
It sounds like the licensing fees to stream a movie are far higher than all the combined costs of a redbox (buying the disks, buying the kiosk, upkeep on the kiosk, etc)
Nope. People will pay more for the convenience of not having to drive to where there is a Redbox, checking to see if the disk is there or waiting, putting up with a possibly too damaged disk, and having to remember to return the thing later or have to pay more.
And that’s even only for a very small selection of titles, anyways.