Redbox Rising: Rental Giant Banks on a Digital Transformation to Reinvent Itself

Digital transformation is the buzzword of the tech era, but for Redbox, it’s a mission statement, marching order and battle cry, all rolled up in one.

Since taking the helm of the Bellevue, Wash.-based company in September 2016, the same month the company went private in a sale to Apollo Global Management, CEO Galen Smith has been working on expanding the brand into the digital realm, gently easing its core value-conscious customers into transactional video-on-demand (TVOD), free ad-supported TV (FAST) and, most recently, ad-supported video-on-demand (AVOD). The latter is effectively a free alternative to subscription streaming services such as Netflix, Amazon Prime, Disney+ and HBO Max.

Up next: An SVOD platform, scheduled to launch in 2022, where Redbox will offer streaming subscriptions from other services directly to its customers.

Moving into the digital space may seem like a leap from renting DVDs and Blu-ray Discs for a couple of bucks a night through the company’s more than 40,000 bright-red kiosks, placed near the entrances of high-traffic supermarkets, drug stores, convenience stores, and mass merchants including Walmart. But as far as Smith is concerned, it’s a natural transition.

“Redbox is a home entertainment destination,” he says in an interview in the conference room of Redbox’s corporate headquarters in Bellevue, just east of Seattle. “Going back to 2016, the thesis that we had when Apollo bought the company was that the opportunity for Redbox was to invest in serving its customers better. That meant expanding the number of offerings that we have for them. And that included digital transactional and then moving on to free live TV and ad-supported on-demand, and now what we’re really excited about is building an SVOD channels platform — so you create this one-stop shop for home entertainment.”

Redbox’s twin aces in the hole: More than 40 million customer emails with data about what they like to watch, and a loyalty program that allows the company’s crack marketing team to cross-promote digital and physical.

“Our loyalty program is something that really differentiates us,” Smith says. “We’ve got 39 million members in our loyalty program, and you’re able to earn points whether you’re renting physically, buying a previously viewed disc, or renting or buying digitally. So this gives an incremental value to the customer, to allow them to consume more content through those loyalty points. And if you think about how this program underlies everything, that is key. Redbox has always been about value, simplicity and convenience, and what we really want to do with this decentralization of entertainment everywhere is find a way to bring it back to the consumer. It’s almost like the rebundling we know has to happen.”

On the TVOD front, Redbox in December 2017 launched Redbox On Demand, where consumers can buy or rent digital copies of the latest Hollywood movies as well as a deep catalog of classic films. During the pandemic, the service was boosted by studios shifting new releases from movie theaters, which were closed, to premium VOD channels, giving Redbox On Demand and other digital retailers a significant boost.

A free live TV service launched in February 2020 with 25 channels and has since expanded to 100, with a lineup of free movies and television, news, lifestyle and sports entertainment programming. With no subscription or even log-in required, consumers can watch anything from vintage “Johnny Carson” and “The Carol Burnett Show” episodes to hundreds of classic movies, from Cheddar News to Bloomberg Television, from “Unsolved Mysteries” to “The Bob Ross Channel,” from CourtTV to Crackle to Popcornflix, the latest addition.

Last December, Redbox announced its entry into the booming AVOD marketplace with Redbox Free On Demand, an ad-supported streaming video service featuring hundreds of movies and television series curated for Redbox’s kiosk-centric consumers. The company thus entered a market that according to Ampere Analysis is being enjoyed by 20% of all domestic Internet users. The most prominent player in AVOD is Fox-owned Tubi, with a content catalog said to be larger than Netflix’s. Redbox now provides access to such niche streamers as Crackle, Popcornflix and Shout! Factory TV, among others.

“We have this really unique customer base, we have 40 million customers, they’re value-conscious and they’re looking for a great entertainment experience,” Smith says. “And one of the things, even going back to 2017, when we launched the transactional video-on-demand service, was we needed to confirm, with our customers, that we have permission to be able to serve them digital content. And what we’ve seen from them is the answer is absolutely yes. There’s interest in streaming digitally from us. And so we’ve continued to build out that business. And then if you think about a value-conscious consumer, they really do care about free content, whether it be free live TV, or movies and TV shows with ads inserted in them. Ad-supported free content is on point for us and how we serve our customer base.”

Down the road, Redbox envisions partnering with SVOD players battling over customer acquisition and churn reduction. The company plans on selling subscriptions through its various platforms in return for a share of the proceeds — effectively acting as an aggregator. The incentive, especially to smaller, niche streamers, is a simplified consumer experience, with billing and playback in a single app. Customer acquisition and retention efforts could also be furthered through Redbox’s
loyalty program.

“There are plenty of opportunities that consumers have to watch some kind of subscription video-on-demand,” Smith says. “We’ve seen, over the past few years, an explosion in the number of offerings. For us, we think we’re better served to be a retail partner to those SVOD services as opposed to launching something ourselves. We see an opportunity to really serve our customer base, these 40 million customers, by being able to create a very simple interaction where they can access all of this content in one place.”
Redbox can also help with the “discovery” aspect that continues to plague smaller streaming services. “We’ve helped customers discover content for years and years,” Smith says. “We know what people like based on their rental histories, and now we’re able to pull all this additional information together from our digital services — what are you watching at the kiosk, what are you watching on transactional, what are you watching on Free Live TV and AVOD, and then what channels are you subscribing to. And that gives us the opportunity to say to someone, ‘We know you probably have never heard of this particular channel, or you may have heard about it, but you are not subscribing to it, but based on your viewing history we think this is the perfect channel for you.’”

So far, Redbox’s digital strategy appears to be working. According to a May 2021 investor presentation, total digital revenue in 2020 doubled to $40 million, from $20 million in 2019, while the “legacy” part of the business, mostly kiosk disc rentals, fell to $506 million, from $809 million in 2019 — a drop Smith attributes largely to the dearth of new DVD and Blu-ray Disc titles. Looking ahead, Smith says he believes the physical business will bounce back as theaters reopen and studios start releasing new movies on Blu-ray Disc and DVD at a normal clip, while digital — led by the new additional PVOD window for digital retailers as well as explosive growth in AVOD — will continue its rapid ascent. Redbox projects that in 2022 legacy revenue will come in at about $712 million, nearly as much as before the pandemic, while digital revenue will mushroom to $193 million, for a total of $906 million — an increase of more than 9% from the pre-pandemic year of 2019.

Like the big streaming services, growth is the No. 1 priority on Redbox’s agenda. Hence the announcement in May that the company plans to go public through the formation of a “special purpose acquisition company,” or SPAC, a relatively new phenomenon that allows a private company to go public without going through the traditional initial public offering approach.

“If we think about where we’re going, and the opportunity ahead, one of the things that’s so exciting about our SPAC transaction is that it’s going to provide additional capital that will really allow us to accelerate this digital transformation, allow us to invest in more ad-supported content, allow us to market not only within our base but even beyond our base, because we know there are other value-conscious consumers out there who would love to watch content through us,” he says. “We just have to get our story out more and tell them that we’re here and that we can serve more and more of their needs.”

To feed its proliferation of platforms, Redbox in October 2019 announced the formation of Redbox Entertainment, a new label focused on acquiring films. One of its latest: The Last Son, set in the Sierra Nevada in the late 19th century and starring Sam Worthington as a murderous outlaw cursed by a terrible prophecy. The film will be released simultaneously in theaters and On Demand later this year.

Other acquisitions include Capone (Tom Hardy), Shadow in the Cloud (Chloë Grace Moretz and Nick Robinson), SAS: Red Notice (Sam Heughan and Ruby Rose), and American Traitor: The True Story of Axis Sally (Al Pacino and Meadow Williams).

Less than a year after the launch of Redbox Entertainment, the company in September 2020 announced a partnership with “John Wick” producer Basil Iwanyk to establish Asbury Park Pictures, an independent film production house charged with producing original movies. The movies will have budgets from $10 million to $12 million each and be shot primarily in Eastern Europe, South East Asia and Canada.

Smith says the whole process began as an attempt to capitalize on the vast amounts of data the company collects. “We have all this data about what our customers love — what genres, what actors — and we thought there was an opportunity for us to help program our own services,” Smith says. “So we picked up movies like Running with the Devil with Nicolas Cage and Laurence Fishburne, and The Fanatic with John Travolta, and those were our first entries.

“Then, about a year later, we partnered with Basil Iwanyk of Thunder Road Films to create a brand-new label, Asbury Park Pictures, and the goal there is to take something very similar to the Blumhouse brand but do it for action movies — because we know our customers love action movies. Our first movie, Black Site, was shot in Australia in February and is currently in post-production. It’s something we should deliver by the end of the year.”

Between Redbox Entertainment and Asbury Park Pictures, Smith says, he’s shooting for 36 movies a year, rolled out at the rate of three per month. Redbox typically acquires all United States or North American distribution rights, Smith says, which is why acquired movies are not limited to the company’s own platforms and services. Over the past two years, Smith says, Redbox Entertainment films have streamed on Netflix, Amazon Prime and Hulu, and some have been available for sale on DVD and Blu-ray Disc at Walmart.

“One of the disconnects that has happened with content releases is that if you sell your movie to a streaming service, then your distribution really is limited to that streaming service,” Smith says. “It may be big, but it is still limited. So what we want to do is make sure that this incredible content, this incredible art, is seen by as many people as possible, so we are releasing movies broadly across every digital transactional platform, then through our own kiosks and Redbox On Demand, and then we’re selling off the Pay 1 window to everyone you’d expect in the space. We’ve sold movies to Netflix, Amazon, Hulu, Showtime, Starz.”

He says Redbox follows a “very traditional” release strategy. “The films are first released on a number of screens, at movie theaters, as well as digital transactional,” typically at a premium rental price, he says. “Then it’s going to go into your typical home entertainment window, which will be Redbox, which will be sellthrough,” he says. “And then it will go to a pay-TV provider, typically a streamer, for some period, anywhere between 18 months and 36 months,” usually 90 days after its debut. On the physical side, Smith says, “We’ve created Redbox Entertainment as our label and we’ve partnered with various folks to release movies. One of our really great partners, particularly over the past year, has been Vertical Entertainment. With Vertical we’ve done Capone, Shadow in the Cloud, SAS: Red Notice, and we’re releasing them broadly. For instance Shadow in the Cloud, which we picked up at the Toronto Film Festival, has done tremendously well on sellthrough. We’ve really been pleasantly surprised at how well it’s done. In fact, we’ve seen really great sales at Walmart and it’s going to continue to be sold at Walmart because we’re seeing strong volume on it.”

Smith says Redbox released Shadow in the Cloud on Jan. 1 of this year “at a time when there was a lack of content” at a $20 PVOD price.

“As you can imagine, there was some demand from our consumer base, but that’s not as big a value,” he says. “But it did incredibly well on both Amazon and iTunes, in terms of that $20 rental price. And we’re happy to make sure that we’re able to create the maximum value per title, and then in May it started streaming on Hulu.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Redbox’s biggest business is still its legacy business, a fleet of more than 40,000 kiosks where consumers can rent new movies and buy used ones on DVD, Blu-ray Disc and 4K Ultra HD Blu-ray. With the popularity of physical media on the downswing, Redbox’s kiosk revenue has been declining each year. It’s also gotten little respect in the mainstream press, and been subjected to repeated knocks by analysts.

But Smith says the business, while declining, is far from dead. “It’s a huge asset for us,” he says. “It is part of our legacy business, but it continues to serve a very important consumer base. Not everyone is going to stream, not everyone can stream. … They may not have the necessary broadband where they live in the country to use these services. So I think there’s an opportunity in terms of these great movies that are being made to make sure that America, all of America, can see them. And we see ourselves as the distribution platform to be able to provide that.

“Will the physical rental business decline over time as it has in sellthrough? Absolutely. But we also see a strong resurgence of titles — as movie theaters start to reopen we’ll have more and more titles throughout the year, so by Q4 we should be almost back to the normal number of titles, and then we expect the normal release slate in 2022. So we do see a huge resurgence in the physical kiosk business. It’s still a great way for a lot of consumers to be able to see movies the studios are distributing.”

Smith maintains there has always been a certain “disconnect” between studio executives, analysts and other entertainment industry thought leaders, who are typically clustered around the coasts, and middle America.

“We found this years ago when we were public,” he says. “There is a general misconception about how we may view content, ourselves, and what someone else might do. There are 40 million active consumers who shop at Redbox kiosks, so clearly someone is doing this — even though you might not be doing it yourself.”

To drive more traffic to Redbox kiosks, Smith says, the company in July is launching an annual subscription service in several test markets.

Consumers can sign up for either of two “loyalty subscriptions” at $9.99 or $19.99 a year. “We’re calling it Redbox Plus — and I promise we decided to do this well before everyone began adding ‘Plus’ to their name,” Smith says with a laugh. “For a one-time annual fee, you get certain benefits, all year round — things like one free movie rental a month, typically of a film that’s been out at least 30 days, and extra time to return movies. One of the pain points of Redbox is that if you return a movie after the 9 p.m. cutoff, even if it’s 9:05, you get charged for an extra night, and this plan provides an extension. It’s a great value, and it’s geared toward customers who we can help drive to come to our kiosks at least once a month.”

Smith notes that the fleet of Redbox kiosks have other uses, other value, beyond renting movies.

“These 40,000 kiosks not only serve our customers with the latest new releases, but they also serve as a billboard for all of our businesses, whether it be Free Live TV or other services we have down the road,” Smith says. “It’s an incredible asset to have all of these retail marketing placements.”
Through its kiosks, Smith says, Redbox has also partnered with subscription streaming services on a number of cross-promotions that capitalize on the company’s loyalty program.

“Think about the ability for us to drive subscriptions, or drive retention and reduce churn, for SVOD players by offering them access to our consumers,” he says. “We did a very successful promotion last year with Showtime in which we drove subscriptions for them by bundling nights at the kiosk with a Showtime trial, so you could see new movies through us and then you had access to all this great Showtime content as part of your subscription.”

Ideal SVOD partners, Smith says, aren’t the leaders like Netflix or Disney+ but, rather, “tier-one providers who might not have the same reach and could use our help in reaching our customer base.”

“One of the exciting things we built last year, but haven’t yet deployed, is the ability for us to offer subscriptions through our kiosks,” he says. “So now all of a sudden you have this new distribution channel through 40,000 kiosks. As someone is checking out and renting the latest new release at the kiosk, they can add a free trial subscription to a streaming service. Since they are transacting with their credit card, we can take the payment right there — and we’re able to start that customer off with a subscription.”
Further value from the kiosks will come later this year, with the installation of video screens atop 4,000 of the company’s 40,000 kiosks that are located inside stores rather than on the outside. ”Two-thirds of the screen time will be for advertising the business or mobile app — new content in kiosks, trailers of new releases, and so on — while the remaining third will consist of CPG ads for other merchandise in the store,” Smith says. “This gives us the opportunity to reach our customers in yet another way.”

Redbox’s legacy kiosks have also allowed the company to launch an ancillary service business, Smith says. “We have about 1,100 employees who live and work around the country who service Redbox kiosks, but they also serve the kiosks of other companies — and that’s becoming a real business, and a growing business for us,” Smith says. Clients include Amazon, with its nationwide network of lockers, and ecoATM, a former sister company of Redbox where consumers can get cash for their old cell phones.

“Any time there’s a technical issue or problem, either mechanical or break-fix, it’s my team that goes in there to make sure it’s running well,” Smith says. “It’s a pretty small segment of our overall business today, but it is something that is going to continue to grow. What I love about it is that we have this work force, and we are able to leverage it, as it is best in class. That’s how we were able to take on the Amazon locker business last June — because we could do it better and cheaper than others.”

These days, Smith is spending most of his time preparing for Redbox to go public through its merger with Seaport Global Acquisition Corp., a publicly traded special purpose acquisition company (Nasdaq: SGAM). The transaction will result in Redbox becoming a publicly traded company with an enterprise value of $693 million. Upon closing — the target date is sometime in the third quarter of this year — Redbox’s common stock is expected to trade on Nasdaq under the ticker symbol RDBX. Apollo Global Management, Redbox’s current owner, will retain its 59% equity stake. The process is expected to bring in $209 million in cash, with half the proceeds used to pay down debt and the balance to invest.

Apollo is actively involved in the process, Smith says. “One of the things that’s really important to note is that everyone is rolling their equity,” he says. “So, management, Apollo, any other current holders, we’re all rolling our equity into the new company. If you think about where we’re going, there is really an opportunity for fast, explosive digital growth. The places that we’re playing in — if you look at the growth in subscription on-demand and ad-supported VOD, these markets are exploding. We put out numbers in our investor deck, and if we can get to less than 1% of market share, we hit our numbers. So it’s this fast, explosive growing space. Apollo are value investors, and this is growth capital — hence, the opportunity to partner with Seaport. So for us, it was really a matter of finding the right partner — which we did, and we’re really pleased with Seaport — which will provide growth capital to really reach that next phase of growth.

“There’s four areas we’re going to invest in: obtaining more licensed AVOD content, building out that channels platform, increasing our marketing spend, and lastly, continue to grow the Redbox Entertainment acquisition and distribution business.”

He pauses, then says, “I think it’s really important to note that when we’re done with building this SVOD channels platform, we’re going to be able to offer consumers more choice between physical and digital than any competitor. And what we realized last year, as there was a lack of content for most of the year, was this multi-product offering, being able to offer different ways to satisfy the consumption needs of consumers, was this incredibly valuable tool. Those customers are worth five times the value of someone who just transacts at kiosks, so what we want to do is continue to lean into that and grow it.”

Follow us on Instagram

Hollywood Sees Redbox as Valued Partner

As Redbox undergoes a digital transformation, its relationship with Hollywood also has evolved into a mutually beneficial partnership — a far cry from the company’s early days, when studios slammed Redbox kiosks for allegedly cannibalizing the sellthrough market and refused to sell the company their DVDs, resulting in a flurry of lawsuits.

Today, Redbox is seen as a significant player in the physical media arena and a growing force in digital movie rentals and sales.

Eddie Cunningham, president of Studio Distribution Services (SDS), the joint venture between Warner Bros. and Universal Pictures to distribute physical media in North America, says Redbox “continues to be a strong and trusted partner and an integral part of the home entertainment business, highly invested in their advancement across both physical and digital. In the physical category, through their kiosks, they have remained steadfast in their commitment to keeping consumers engaged and transacting via innovative marketing and breakthrough collaborations.”

“Redbox is synonymous with movies and a first-stop choice for millions of U.S. consumers as a trusted source of what’s new and what’s trending,” says Mike Takac, EVP and general sales manager for Warner Bros. Home Entertainment. “Redbox’s loyal customer base has adopted hybrid consumption across disc rentals, digital transactional and streaming, and they’re meeting customer’s needs for where and how they watch content.”

Jed Grossman, EVP and GM of sales and distribution for home entertainment at Lionsgate, agrees. “Redbox continues to be an important partner and a major player in the home entertainment space at a time when demand for content is greater than ever across a wide array of theatrical, packaged and streaming options,” he says.

“Redbox continues to be a vital player in the home entertainment ecosystem,” says Jason Spivak, EVP of distribution for North America Television & Home Entertainment at Sony Pictures Entertainment. “They have a strong, loyal and engaged customer base at their kiosks as well as increasingly through their digital platform.”

Michael Bonner, president of Universal Pictures Home Entertainment, agrees. “Redbox continues to be an important and valued partner with a loyal and engaged customer base,” he says. “Their commitment and focus on the consumer, along with their marketing approach, has enabled them to maintain a robust physical business while expanding into the digital space, where they have seen strong growth and adoption from their customers.”

Bob Buchi, president of Paramount Home Entertainment, echoes the other executives’ words. “Redbox has long been a vital component of the home entertainment industry and continues to evolve to meet the changing needs of today’s consumer,” he says. “With their keen promotional prowess, they have been able to tap into their enormous database of consumers to continue to serve them with physical product or with their fast-growing digital businesses.”

Q&A With Galen Smith: The Story Behind Redbox Going Public the SPAC Route

Redbox in May announced its intent to go public through the formation of a “special purpose acquisition company,” a relatively new phenomenon that allows a private company to go public without going through the traditional initial public offering approach. The transaction will result in Redbox becoming a publicly traded company with an enterprise value of $693 million. Upon closing, Redbox’s common stock is expected to trade on Nasdaq under the ticker symbol RDBX.

Media Play News reached out to Redbox CEO Galen Smith for a Q&A, part of an ongoing series of conversations with home industry leaders past, present — and future.

MPN: First of all, Galen, why go public in the first place? Redbox has been owned by Apollo Global Management for five years — why leave now? 

Smith: We’re at an important inflection point in our digital transformation — over the past several years, Redbox has transformed from a single-product physical offering into a multi-window, multi-product experience for entertainment lovers, combining physical and digital channels to provide customers more choice. Redbox has always aimed to serve the value-conscious customer well and by raising additional capital through this transaction, we’ll be even better positioned to do that by enhancing our offerings and customer experience. We plan to invest in additional ad-supported content, deploy an SVOD and premium channels platform, and expand original movies through Redbox Entertainment titles.

Apollo has been a great partner and this transaction doesn’t change that — along with other current equity holders, they are rolling 100% of their interests into the new company, so we’ll continue to have their support. With the shift to digital intensifying, we see exciting opportunities ahead for Redbox and believe the best way to accelerate the growth of our digital business is to attract additional investors. We’re pleased we found a great partner in Seaport Global Acquisition Corp (NASDAQ: SGAM), who shares our confidence in the path forward and wants to make that a reality.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

MPN: Why are you going the SPAC rather than IPO route? Is it because Wall Street is all about growth, and investors might not see the opportunity in Redbox that you do? What are the advantages? 

Smith: We chose to go the route of merging with a SPAC as we thought it was a more efficient way to raise capital and become a public company. Redbox is one of the most recognized entertainment brands in the U.S., and we view this transaction, which will help us accelerate growth, as a natural next step in our evolution.

We’re eager to expand our investment in Redbox Entertainment to acquire and distribute original films, and this transaction will help us do that. We’ve already released 16 original movies and plan to expand that to 36 titles annually in theaters and widely on demand including through Redbox. We also expect significant growth in our digital business as we invest the capital we raise in licensed content, marketing and product expansion and offerings.

MPN: As a public company, won’t user data be made public every 90 days? What does this mean for Redbox? 

Smith: As a public company, we will report on our business performance every quarter as we did when we were previously part of Outerwall. We look forward to demonstrating our progress in executing our digital transformation.

MPN: As a standalone company, will you have more flexibility than you did under Apollo?

Smith: Apollo has been a great partner, and in this next chapter as a public company, we intend to accelerate and build on the transformational work we began as a private company. As part of Apollo, we launched and grew TVOD and AVOD platforms through significant investments in technology. Additionally, we launched an upgraded mobile app and website, and introduced our new loyalty program, Redbox Perks, which now has 39 million members. We also launched Redbox Entertainment to produce, acquire and distribute original content for our customers.

MPN: Will there be more synergies as a public company? 

Smith: One of the most exciting parts of becoming a public company is gaining access to new capital and resources, which will provide additional flexibility to make strategic acquisitions that could further accelerate our opportunities to serve customers and our transformation.

MPN: Redbox remains the cheapest way to rent a new-release movie. How do you go about relaying that message to consumers fixated on streaming?

Smith: Our vision is to provide quality home entertainment to everyone, and to make it ridiculously cheap and easy for consumers to get the entertainment they want most. While we’ve seen and led a lot of changes in the entertainment landscape over the past two decades as the industry has evolved, our commitment to three core tenets — value, convenience, and simplicity — have remained constant at every step. These tenets will continue to guide us as we expand into digital, and we’re fortunate to have a loyal customer base that trusts Redbox to provide a differentiated, affordable entertainment experience.

Importantly, Redbox is an “and” business — our customers are renting DVDs and streaming movies digitally. As we’ve bolstered our On Demand platform we’ve seen sustained interest from customers who continue to rent DVDs at our kiosks, which provide the best value for new-release movies. And, we’re proud that our expansion into digital has allowed us to better serve customers through more choice.

Redbox’s Ad-Supported ‘Free Live TV’ Available Now, Nationwide

More details have emerged on Redbox’s new ad-supported live TV service, which Media Play News reported on Feb. 11.

The service, meant to complement the company’s digital and packaged-media strategies, now has an official name, Redbox Free Live TV, and after a brief test has been rolled out nationally, with nearly 30 channels of movies, episodic series and Web shorts including three exclusive Redbox-branded channels.

Similar to ViacomCBS’s Pluto TV, Redbox Free Live TV serves up content in the same way as a regular broadcast TV channel, with scheduled show times rather than on demand.

Galen Smith

“This is available everywhere, now,” Galen Smith, CEO of Redbox, told Media Play News. “We’re trying to do what no one else does — meeting the content needs of our customers wherever and however we can. They can get the latest releases, at the best prices, at our kiosks; they can watch content instantly, digitally; and now we are giving our value-loving customers something more, which is free live TV.”

Redbox Free Live TV can be accessed at redbox.com and via the Redbox app for the Roku platform, iPhone, Apple TV, Android-enabled devices, VIZIO SmartCast TVs and LG Smart TVs. The service doesn’t require a login. Viewers can click “Free Live TV,” choose a channel and start watching.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

New devices are launching in the coming weeks, Smith said.

Accompanying Redbox Free Live TV is the launch of three Redbox-branded channels featuring content from a variety of studios and content owners including Lionsgate, a key strategic launch partner for programming content.

  • Redbox Rush, with action and adventure movies;
  • Redbox Comedy, with comedies and stand-up performances; and
  • Redbox Spotlight, Redbox’s curated channel of featured and recommended titles.

The three featured channels include a mix of classic and cult movies and television series, news and short-form entertainment including FilmRise Free Movies, Unsolved Mysteries, Forensic Files, USA TODAY, NowThis, Dove Channel, American Classics, Comedy Dynamics, Maverick Movies, Filmhub, Fail Army, People are Awesome and more.

Follow us on Instagram

Smith said is looking at launching 10 additional channels every month, and building on the current team of 16 content providers, as well.

“The expansion of Redbox into live streaming television builds on the company’s commitment to being the go-to entertainment destination for consumers wanting choice and amazing value,” Smith said in a statement. “With Free Live TV, we’re now offering an unparalleled level of content choice through our kiosks, on-demand and now free streaming. We know what consumers want to watch and Free Live TV expands the ability to reach consumers and tap into the growing OTT market.”

With the launch of Redbox Free Live TV, the company continues to transform itself into a multi-channel content provider and programmer. Last year, Redbox launched Redbox Entertainment, a new division to produce and distribute original content across its service.

Through Redbox Entertainment, the company released The Fanatic (starring John Travolta) and Running with the Devil (starring Nicolas Cage, Laurence Fishburne). Another Redbox Entertainment-backed film, The Lost Husband, produced by and starring Leslie Bibb and starring Josh Duhamel, will hit theaters in April.

 

Oh, What a Year — With Transformational Changes, Home Entertainment in 2019 Got Smaller — and Bigger

The phrase “transformational change” has been used so much it’s become a cliché — and yet there really is no better way to describe what happened in not just home entertainment, but also the entertainment industry overall, in 2019.

The completion in March of the Walt Disney Co.’s purchase of 20th Century Fox saw the number of major studios drop to five from six. Some of the home entertainment sector’s most familiar faces were suddenly gone, including Mike Dunn, the longtime leader of Fox’s home entertainment unit, and Danny Kaye, the visionary behind Fox Innovation Labs. Later, in the summer, Janice Marinelli, Disney’s home entertainment chief, also exited in a surprise move, given that she had opened an office on the Fox studio lot and was reportedly screening staffers.

In November, two new streaming giants emerged to take on longtime leader Netflix, Apple TV+ and, most significantly, Disney+.

Meanwhile, a new flavor of streaming gathered momentum: free to consumers, paid for by advertisers. Among the heavyweights jumping into what’s known as “AVOD” are ViacomCBS, with its Pluto TV acquisition, and Comcast Corp., which in December was reported to be in advanced talks to acquire Xumo TV, which boasts more than 140 digital channels of programming across 12 genres, including sports, news, kids and family entertainment.

The overall impact of all these developments on home entertainment: It got smaller — and bigger.

Smaller, because the traditional transactional business model that has defined home entertainment since its birth more than 40 years ago has increasingly come under fire, with subscription streaming, in particular, gobbling up more and more consumer attention — and dollars — that previously would have gone toward buying or renting movies, either on disc or through digital retailers.

But also bigger, because streaming, in its various incarnations, is now widely accepted as being part of home entertainment — which is now broadly defined as people watching what they want, on demand. There’s even a new name for all of this — direct-to-consumer — which was first adopted by Disney and is now used interchangeably with “home entertainment.”

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Bob Buchi, president of Paramount Home Entertainment, says 2019 “was the year of transition.”

“From media mergers and changing consumer viewing habits to the explosion of streaming services, the landscape has shifted dramatically,” he says.

The Nov. 1 launch of Apple TV+ marked the tech giant’s entry into the content business, with nine original series. One of them, “The Morning Show,” picked up several Golden Globe nominations from the Hollywood Foreign Press Association (HFPA), a first for a new streaming service.

Less than two weeks later, Disney launched its much-ballyhooed Disney+, with a full menu of in-demand movies and series — including the “Star Wars” spinoff “The Mandalorian.” Disney said more than 10 million people signed up for the service in the first 24 hours. By the end of November, the service had 24 million subscribers, according to estimates from Wall Street firm Cowen & Co. (Netflix as of October had more than 60 million domestic subs.)

“It’s an exciting time and we believe we have a unique and significant role to play,” Ricky Strauss, president of content and marketing for Disney+, told Media Play News on the eve of the service’s launch. “Disney+ will compete based on the unparalleled strength of our brands, the quality of our intellectual property, and expertise in high-quality video streaming.”

And yet industry insiders insist that despite streaming’s growth, there’s room for transactional — largely because new theatrical films, particularly the blockbusters, aren’t available on SVOD services. This distinction has prompted FandangoNow, one of the big digital retailers, to boldly proclaim on its home page, “New releases not on Netflix, Amazon Prime or Hulu subscriptions.”

“Because we’re the first point of entry for fans to see movies in theaters, and first at home, we’ve seen a significant growth among consumers who are excited to own movies as soon as they’re available digitally,” says Cameron Douglas, head of FandangoNow. “Fans looking for high-quality content right out of theaters, including 4K HDR movies, don’t have to wait until they arrive later on subscription services, and innovative deals like rental binge bundles and the availability on new platforms keep them coming back to transactional digital services like our own.”

“New movie releases continue to be sought out by consumers during the first window in the home amidst the frenzied buzz around new streaming services,” adds Michael Bonner, EVP of digital distribution for Universal Pictures Home Entertainment. “While there’s no denying the landscape is becoming more competitive, this business has successfully co-existed with abundant availability of non-transactional content for a long time and we expect it to continue to do so.”

“There is space — and demand — for both transactional content as well as streaming — just as there is consumer interest in both digital and physical,” says Amy Jo Smith, president and CEO of trade association DEG: The Digital Entertainment Group.

Beyond new releases, streamers have a limited selection of older films and TV shows, particularly with their increased focus on original content.

“For many consumers, their streaming options are good enough,” says Mark Fisher, president and CEO of home entertainment trade association the Entertainment Merchants Association (EMA). “But just like the days when the first video rental stores opened and made it easy for the consumer to watch anything they wanted to watch when they wanted to watch it, online VOD retailers offer that same opportunity to the consumer. I know that every time I see a montage of old movie clips, I’m driven to watch titles that aren’t new releases — and these are titles not readily (or easily) found on the streaming services.”

Sales of digital movies, in particular, were a bright spot, with consumer spending up nearly 7% in the first nine months of 2019, according to trade association DEG: The Digital Entertainment Group.

“We’ve continued to see growth in EST (electronic sellthrough) — both in our new releases and in our catalog,” says Jason Spivak, EVP of distribution, for Sony Pictures Home Entertainment. “Certainly the enhanced consumer experience enabled by Movies Anywhere is part of that, as is increasing consumer connectivity in their homes. EST continues to gain prominence in our marketing planning, release data scheduling, and retailer partnerships.”

Ron Schwartz, president of Lionsgate Home Entertainment, says Lionsgate EST revenue grew 30% this year, “four to five times faster than the overall industry. With increased collaboration between studios and retailers, and more offerings such as dynamic bundling, customers are starting to build their lockers up to 10-plus titles. Recent data shows that once a customer gets to between 10 and 12 titles in their locker, their EST purchasing behavior doubles.”

In addition to selling movies, digital retailers also offer them for a la carte streaming, the digital equivalent of a physical movie rental. Redbox remains the only retailer to offer both digital and physical rentals, the former through an e-commerce site and the latter, through a network of more than 40,000 kiosks situated outside (or inside) large retailers like Walmart, convenience and drug stores, and other retailers.

“Redbox owns the transactional space with more transactions across physical and digital formats — for rental and purchase — than any other transactional provider,” says Redbox CEO Galen Smith.

In 2019, he said, Redbox expanded its offering of 4K Ultra HD discs into new markets, and stepped up promotions as well, with its Back to the Movies campaign and a joint Dinner & A Movie offering with meal delivery service DoorDash.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

In addition, Redbox Entertainment, a new content acquisition and production division, has further transformed Redbox into a multi-channel content provider and programmer. Launched in October, the new division is headed by Marc Danon, who spent eights at Lionsgate, most recently as SVP of acquisitions and business development.

Disc sales in 2019 continued to decline in the low double digits, with DEG reporting that in the first nine months of the year, combined 4K Ultra HD, Blu-ray Disc, and DVD revenues were down 18.5% to an estimated $2.3 billion — exactly half what they amounted to five years ago, in 2014.

But studios continued to support the disc. And while a trend among smaller titles is to release them only on DVD and digital, bypassing Blu-ray Disc, major new releases are still getting significant marketing campaigns behind them, particularly for the 4K Ultra HD editions. The UHD disc also made headlines last August when the UHD Alliance, along with leaders in consumer electronics, the Hollywood studios and members of the filmmaking community, announced collaboration on a new viewing mode for watching movies called “Filmmaker Mode,” designed to reproduce the content in the way the creator intended. Filmmaker Mode, bowing next year, will allow viewers to enjoy a more cinematic experience on their UHD TVs when watching movies by disabling all post-processing (e.g. motion smoothing, etc.) so the movie or television show is displayed as it was intended by the filmmaker, preserving the correct aspect ratios, colors and frame rates.

“For the time being, 4K UHD is still the gold standard for at-home content,” says Jim Wuthrich, president of Warner Bros. Home Entertainment & Games. “With hardware costs dropping and television functionality such as Filmmaker Mode being made available next year, there is still a great value proposition in owning content in 4K UHD, both physically and digitally, as is still represents the best home-viewing experience.”

Follow us on Instagram

“As evidenced by the exceptional growth of 4K UHD to date, it is clear that there is a sizable appetite for premium high-definition products, and that format plays a meaningful role in boosting retail traffic,” says Eddie Cunningham, president of Universal Pictures Home Entertainment.

Retail partnerships are key, Cunningham adds. “Given that physical and digital transactional consumption rates are remaining steady year over year and that disc purchases are making up more than half of that consumption, there’s no question that movie buyers continue to be vitally important to retail,” he says. “At no other time in our industry has it been more critical to ensure that we work together to retain the loyalty of movie consumers, creating urgency for our products and delivering the utmost value, quality, accessibility and convenience possible.”

 

Redbox Launches Content Acquisition and Production Arm

Redbox is revving up its efforts to provide original content to customers of its disc rental kiosks and Redbox on Demand transactional video-on-demand service.

The company on Oct. 25 announced the formation of Redbox Entertainment, a new label to acquire and produce content for Redbox’s 50 million U.S. customers.

“The Redbox brand is built on delivering the best selection of movies from the biggest blockbuster releases to films in genres and with actors that appeal to our loyal customers,” said Redbox CEO Galen Smith. “The formation of Redbox Entertainment leverages our deep insights to bring projects that we know appeal to our audience to deliver additional value and entertainment.”

Marc Danon has been tapped as senior advisor to head content acquisition for Redbox Entertainment. He reports directly to Smith.

Marc Danon

Danon previously was president of acquisitions and co-productions at Broad Green Pictures; prior to joining Broad Green in July 2015, he spent eight years at Lionsgate, most recently as SVP of acquisitions and business development. There, he worked on the acquisition of such films as Kevin Hart: Let Me ExplainJohn WickDear White PeopleA Most Wanted ManEverything Must Go and The Skeleton Twins.

Danon also built and managed third-party brands and partnerships with ABC, Codeblack, Comcast, ITV, Marvel, NBC, and Saban.

Subscribe HERE to the FREE Media Play News Daily Newsletter!

Earlier in his career, Danon held various acquisitions positions at Netflix, Catch 23 Entertainment and Artisan Entertainment.

“Marc is a terrific fit to lead the growth of Redbox Entertainment,” Smith said. “He’s a talented creative with an impressive track record as a champion of films that catch fire with audiences; and a skilled executive adept at maximizing distribution opportunities and cultivating strategic partnerships.”

Redbox Entertainment is funding, developing and producing projects across genres, with a focus on action, comedy, and suspense/thrillers, the company said.

Projects are being sourced now — directly and through a number of distribution partners and channels. New projects will be announced soon.

Content acquired by Redbox Entertainment will be available physically at Redbox kiosks and digitally via Redbox On Demand, as well as in downstream windows post-Redbox release.

Redbox reaches 50 million consumers across the United States at more than 41,000 kiosks and an expanding On Demand offering. The company’s loyalty program, Redbox Perks, has 34 million members.

Redbox Bows First On Demand Original Movie With Bob Saget Film ‘Benjamin’

Streaming services like Netflix and Hulu aren’t the only ones getting into original content.

Redbox on April 9 announced its first exclusive, Bob Saget’s new film, Benjamin.

The dark comedy, which tackles the serious topic of drug addiction, will be released exclusively on Blu-ray Disc and DVD at more than 41,500 Redbox kiosks nationwide on April 23.

Also on April 23, the film will be available for a la carte streaming or digital purchase on Redbox On Demand, the company’s on-demand digital movie store.  The film is the first “Redbox Original” released on Redbox On Demand.

Saget directed and stars in Benjamin, which also features a heavyweight cast of comedians and actors, including Rob Corddry, Mary Lynn Rajskub, Kevin Pollak, Peri Gilpin, Dave Foley, Cheri Oteri, Max Burkholder, Clara Mamet, David Hull, Jonny Weston, and James Preston Rogers.

The story unfolds as a family calls an intervention on Facebook for Bob Saget’s on-screen son, Benjamin; a 15-year-old they think is under the influence of drugs. Yet soon it becomes clear that those confronting Benjamin’s problems have many problems of their own.

“We’re making Benjamin available at Redbox because we believe in the power of movies to bring people together around topics that matter,” said Redbox CEO Galen Smith. “Redbox has the unique ability to market films directly to our more than 50 million customers who like the choice of renting from $1.75 a night from the kiosk or instantly on their favorite device or smart TV via Redbox On Demand.”

Now in the midst of a national standup comedy tour, Saget reveals his dramatic, nuanced side while directing and starring in Benjamin.

“This film tackles serious subject matter – our kids and the temptations and challenges they face – but tells it through the lens of a familiar cast of comedic actors who make the topic approachable and poignant,” Saget says. “An exclusive Redbox release brings the important message of the film directly to communities nationwide that are facing the battle of addiction.”

Saget is a Grammy-nominated comedian, actor, director and New York Times best-selling author. Saget hosts, writes and executive produces the new ABC series “Videos After Dark,” featuring home videos with an edgier twist. The show premiered an hour-long first look on March 12 with the full season debuting later this year.

Subscribe HERE for FREE Daily Newsletter!

Saget also can be seen in the upcoming Season 5 of the Netflix series “Fuller House.” His new hour stand-up special, “Zero To Sixty,” is streaming on Amazon Prime and is available to rent or buy on Amazon, iTunes and many other platforms. Saget continues to tour across North America with his standup comedy act.

Benjamin is produced by Nicholas Tabarrok and written by Joshua Turek.  The director of photography is Arthur Albert, the editor is Bruce Green and the music composer is Peter Melnick.

Consumers can watch the trailer at Redbox.com/Benjamin and add it to their “Wish List” before the April 23 release date. On April 23, consumers can visit Redbox.com/Benjamin to reserve a copy for rental at their local Redbox kiosk or stream it via Redbox On Demand.

Media Play News Fast Forward 2019 Awards Luncheon

Media Play News honored four digital retailers with the publication’s second annual Fast Forward Awards for driving the home entertainment industry forward. This year’s awards included a luncheon and ceremony, held April 4 at the Universal Hilton in Universal City, Calif., and hosted by the Entertainment Merchants Association. Awards went to Cameron Douglas of FandangoNow, Jonathan Zepp of Google Play Movies & TV, and Galen Smith of Redbox, and the team at Apple iTunes. EMA used the event to launch its EMA Leadership Development Foundation, aimed at supporting professional training and development within the home entertainment industry, and particularly within the EMA membership.

Fast Forward Awards 2019: Keeping the Faith

Digital retailers are revving up their promotional engines and helping studios chase down the Holy Grail: transactional sales and rentals of movies over the Internet. These four Fast Forward honorees are the leaders of the pack.

The rise of subscription streaming has revolutionized home entertainment consumption — and music, as well.

We still pick and choose what we want to watch (or hear), along with when, where and how. But instead of paying for a specific movie, TV show or song, we pay one price for a month’s worth of access to whatever happens to be
available.

The problem with Netflix and other streamers is that while the buffet of entertainment choices appears endless, the really good dishes are conspicuously absent. Big theatrical movies, in particular, don’t show up on subscription streaming services for years, if ever. And the continued appeal of big-screen blockbusters among home viewers is what’s keeping the traditional “transactional” model alive.

As disc sales continue to decline, digital movie sales and “rentals” (a la carte streaming) are on an upswing, thanks in large part to aggressive and innovative digital retailers.

Four standouts are being honored in the second-annual Media Play Fast Forward Awards, which recognize people, technologies, organizations, products or services that move the home entertainment industry forward.

This year’s honorees are Cameron Douglas, VP of home entertainment at FandangoNow; Google Play’s Jonathan Zepp, head of media and entertainment; Galen Smith, CEO of Redbox; and the team at Apple iTunes (the company asked that no individual be singled out).

FandangoNow has been revving up its promotional muscle and is aggressively tying in digital purchases and rentals with its movie-ticket-selling sister company Fandango.

Google Play Movies & TV is on a big 4K push, automatically upgrading customers’ past movie purchases to the new format so they can stream them in 4K, even if the movies were originally purchased in standard- or high-definition.

Redbox has nearly doubled the selection of films and TV shows available on its year-old digital movie store, Redbox On Demand, and last December announced a new deal in which its app is featured on all Vizio SmartCast TVs — in addition to TVs from Samsung and LG.

And Apple’s iTunes service began the year with a game-changing deal with No. 1 TV manufacturer Samsung. New Samsung SmartCast TVs will allow consumers to access their iTunes movie and TV show libraries through a new app. They’ll also be able to buy new movies or TV shows directly through the app.

As an added benefit to consumers, Google Play Movies & TV, iTunes and FandangoNow have also joined Movies Anywhere, the cloud-based movie locker service that allows consumers to access their digital libraries.

Subscribe HERE to our FREE daily newsletter!

The Media Play Fast Forward awards are an outgrowth of the Home Entertainment Visionary Awards, which were launched in 2002 by the now-defunct Home Media Magazine. Comcast’s Brian Roberts was the 2017 honoree. Warren Lieberfarb, the father of DVD, was the first, back in 2002. Other honorees have included Sony Pictures’ Ben Feingold, Samsung’s Tim Baxter, and Walmart’s Louis Greth and Chris Nagelson.

The first Media Play Fast Forward honorees, recognized last year, were Movies Anywhere and Fox Innovation Labs.

FandangoNow

Cameron Douglas

FandangoNow is a transactional VOD service owned by Fandango, the nation’s leading movie consumer destination, which also owns Rotten Tomatoes and MovieClips, the top multi-channel network for trailers and movie-related content. FandangoNow serves millions of visitors a month, with more than 80,000 new-release and catalog movies, next-day TV shows, and a growing library of 4K titles available to watch on more than 200 million connected, over-the-top and mobile devices.

The business is split fairly evenly between electronic purchases and rentals, says VP of home entertainment Cameron Douglas, and the service’s heavy push into 4K has resulted in 20% of transactions coming from the ultra HD format when available.

FandangoNow — which prior to its January 2016 acquisition by Fandango was known as M-GO, a joint venture launched three years earlier by DreamWorks Animation and Technicolor — doesn’t rely on algorithms. Instead, its entertainment options are hand-picked by in-house film experts, celebrity guest curators and further spiced up by Rotten Tomatoes’ Tomatometer scores and editors’ picks.

The service also boldly plays up the fact that it offers high-demand content not available on Netflix and the other streaming services.

“We’re proud of our differentiated offerings that you can’t find on iTunes or Amazon,” Douglas says. “For instance, each month we highlight a selection of ‘Fresh Picks,’ critically-acclaimed titles that you’ll want to see but aren’t available on Netflix or other streaming subscription services. Each title is rated fresh on Rotten Tomatoes and is only $2.49 to rent. We also innovated a first-of-its-kind rental initiative called ‘Binge Bundles,’ offering multiple titles from fan-favorite franchises and themed collections, bundled together to rent and binge for one low price.”

What might be FandangoNow’s trump card is its ability to tie in digital movie sales and rentals with movie ticket sales. Most recently, FandangoNow offered a free DreamWorks Animation movie to fans who purchased Fandango VIP tickets to early access screenings of How to Train Your Dragon: The Hidden World. Another recent promotion offered a free movie ticket for every $20 spent on FandangoNow. “We are a full-service destination for film fans,” Douglas says.

Douglas had been SVP of content at M-GO prior to FandangoNow’s 2016 launch. Before that he held senior positions at top entertainment media companies including DreamWorks, Paramount, Fox and Disney. He began his career in 1986 as manager of affiliate marketing and programming at Showtime Networks, and later held operations, product and merchandising posts at Musicland and Disney Stores. Douglas began his involvement with home entertainment in 1993 when he joined Buena Vista Home Video, at the time Disney’s home video distribution arm, as senior sales analyst and, later, assistant marketing manager. Today Douglas also serves as the chair of the home entertainment industry group, the Entertainment Merchants Association (EMA).

Google Play Movies & TV

Jonathan Zepp

Google Play Movies & TV is an online video store that sells and rents movies, TV shows and other filmed content. It is part of Google Play, which launched in March 2012, bringing together the Android Market, Google Music, and Google eBookstore under one brand. Other services operating under the Google Play banner are Google Play Books, Google Play Console, Google Play Games and Google Play Music. Google Play gives customers one place to find, enjoy and share their favorite apps, games, movies, TV shows, music, books and more, on the Web for any device.

Google Play Movies & TV, like the other Google Play services, uses the power of the cloud to manage digital entertainment — so customers can access their movies and TV shows on their phones, and have them available instantly on their computers, tablets or connected TVs.

Google Movies & TV has been particularly aggressive on the promotional front, offering 99-cent movie and TV show rentals around holidays such as Thanksgiving and to power users of its site. In advance of the 91st Academy Awards last month, Google Play offered deals on past Oscar-winning movies as well as the latest Oscar-nominated films. Google Play also featured apps and games inspired by the Best Picture nominees.

The biggest buzz at Google Play, at least among movie enthusiasts, is its 4K upgrade feature. The digital retailer last October announced in a blog posting that when 4K titles are available, the service will automatically upgrade customers’ past movie purchases “so you can stream in 4K, even if you originally bought the movie in SD or HD. It’s all on us, just open the Play Movies & TV app and we’ll let you know which titles have been upgraded.”

Google Play also announced a price drop for 4K movies, with prices as low as $14.99 to own (and $4.99 to rent).

In addition to 4K Sony Bravia TVs, Google announced “you can now watch in 4K using the Play Movies & TV app on most 4K Samsung Smart TVs, and we’re working on adding support for LG as well.” In addition, the Google Play app for Samsung, LG and Vizio TVs was updated.

Jonathan Zepp leads Media & Entertainment for Android & Google Play. He describes himself as “an entertainment content enthusiast fortunate to find my way to Google at a time when the company was broadly considering how to think about entertainment content.”

Zepp is charged with looking after partnerships and business strategy for entertainment, sports and news video content. He and his team also drive business and content operations for Google Pay Movies & TV. He previously led content partnerships for YouTube in the Americas. Prior to joining Google Play in June 2011, Zepp held key digital entertainment leadership roles at Sony Network Entertainment, Paramount Pictures and Napster. A graduate of the Boston University School of Law, he began his career as a corporate and intellectual property lawyer.

Redbox On Demand

Redbox CEO Galen Smith

If you only think of Redbox for its fleet of more than 41,500 bright-red DVD and Blu-ray Disc rental kiosks, stationed outside Walmarts, supermarkets and drugstores, you’re only getting half the picture.

Redbox also operates a digital movie store, Redbox On Demand, that since its launch in December 2017 has “surpassed major milestones to become a real player in the competitive digital home entertainment space,” says Redbox CEO Galen Smith.

Redbox On Demand was established as a complement to the disc-rental kiosks for which the Redbox brand was known. “Our customers come to us for that transactional experience — it’s Friday night, and they want to watch a specific movie,” Smith told Media Play News in January 2018. “We try to satisfy them with our kiosk network, but there are occasions where you might not want to go out and rent a movie from a kiosk. So rather than lose that transactional occasion, we’re giving them the chance to get it online.”

Consumers are seizing that opportunity, Smith says. Nearly 60% of Redbox On Demand consumers are people who have either stopped renting discs at Redbox kiosks or never patronized Redbox before, Smith says.

“We’re seeing hundreds of thousands of customers, including bringing back folks we haven’t seen in a while,” he says. The On Demand service has even surpassed expectations in its ability to bring customers back to the box.

Last December, Redbox On Demand celebrated its one-year anniversary with a most welcome development: Redbox apps are now featured on all Vizio SmartCast TVs. Without apps, it’s hard for digital retailers to sell or rent movies over the Internet. Redbox apps are also available on TVs made by Samsung and LG, and the addition of Vizio — also a top 10 brand — is significant, says Chris Yates, general manager of Redbox On Demand.

Redbox continues to aggressively seek out partnerships with consumer electronics companies to install Redbox On Demand apps on new TVs and devices.

The company also continues to expand its library of content “to include more titles we know our customers want to watch,” Smith says. “Since launch, we’ve added about 5,000 titles, and now have more than 12,000 curated titles in our library. We are focused on providing consumers the content they want most.

“As the industry continues to evolve, consumers are inundated with more entertainment choices, but Redbox and our Redbox On Demand operate in a unique position offering choice across a wide variety of formats and price points. We’re pleased with the momentum we’re seeing with Redbox On Demand — particularly in bringing people back into the Redbox ecosystem.”

Smith was named CEO of Redbox in 2016 and is the architect behind many of the company’s major achievements, including Redbox On Demand and removing delays in studio windows at the kiosk. A former Morgan Stanley investment banker with an MBA from the University of Chicago, Smith, 42, joined the finance team at Redbox in May 2009 as director of corporate finance. Coinstar, the operator of a network of coin-cashing machines, had just acquired the other half of Redbox from the McDonald’s Corp. Within two years, Smith had become SVP of finance for Redbox. “I loved being in the business,” he told Media Play News. “I started negotiating studio contracts and building relationships across the ecosystem.”

Smith was the CFO of Outerwall (Coinstar’s new moniker) when the company was sold to private equity investor Apollo Global Management in September 2016, and Smith was named CEO of Redbox.

“With this offering, we are giving consumers more choices than ever before,” Smith says of Redbox On Demand. “We are bringing them back into the Redbox ecosystem and reminding them of the great value we offer at the box at $1.75 a night.”

Apple iTunes

Less than three months after the June 2006 launch of Blu-ray Disc as the next-generation physical media product, Apple’s then 3-year-old iTunes Store birthed the digital movie sales business.

“Today, we are making more than 75 films available online, and we will be adding more every month,” the late Apple founder Steve Jobs told reporters at a September 2006 press event. The first batch of films were from Disney, Pixar, Touchstone and Miramax, “including Pirates of the Caribbean and Cars,” he said.

Two years later, in his Macworld 2008 keynote, Jobs announced iTunes would begin “renting” movies over the Internet, as well.

Since then, the iTunes Store has continued to be among the most aggressive digital retailers, with a growing library of what now numbers about 112,000 movies and 300,000 TV shows for sale or rent, playable across a broad swath of Apple devices. A “Family Sharing” feature lets up to six people in a family share each other’s iTunes purchases.

Two years ago, the Wall Street Journal reported that Apple’s share for selling and renting movies, TV shows and other video content had dropped to between 20% and 35% — down from over 50% as recently as 2012. Despite the percentage drop, Apple told the Journal that its movie rentals and purchases had risen over the previous year and had reached their highest level in more than a decade.

Apple keeps a sharp eye on what’s going on in theaters. For the release earlier this month of Captain Marvel, the iTunes store discounted numerous Marvel movies, dropping the purchase price to $14.99 for such recent hits as Black Panther, Avengers: Infinity War and Ant-Man.

On the eve of the January CES in Las Vegas, Samsung Electronics announced it will offer iTunes movies and TV shows, and provide Apple AirPlay 2 support, on 2019 Samsung Smart TV models beginning this spring. In what is believed to be an industry first, a new iTunes Movies and TV Shows app will debut only on Samsung Smart TVs in more than 100 countries. AirPlay 2 support will be available on Samsung Smart TVs in 190 countries worldwide.

Speaking at the Samsung “First Look CES” preview event at the Aria Resort & Casino, Andrew Sivori, a VP of TV product marketing at Samsung Electronics America, told members of the press, “For the first time, users in more than 100 countries will be able to access the iTunes Movies and TV Shows app. … Users will be able to access their iTunes Movies and TV Shows purchases as well as buy or watch something new from the iTunes store.”

Q&A: 10 Questions

We sat down with three of our Fast Forward-winning retailers — in a virtual way, of course — for a discussion of key points affecting the digital movie sales-and-rental trade. (Jonathan Zepp was traveling; his quotes are from an earlier interview with Thomas K. Arnold in Variety.)

How do we get across to consumers the value proposition of buying or “renting” a digital movie when they are used to an all-you-can watch “buffet” from Netflix and the other streaming services for a little more than $10 a month?

Cameron Douglas, FandangoNow: “Premium content for purchase has always coexisted with subscription services. When I worked at the studios, we always knew our titles would hit the pay window on HBO or elsewhere at some point, but we still had reliably significant volume for the physical DVDs and Blu-ray Discs for a long retail lifecycle. As subscription offerings continue to grow, so too does consumer comfort and familiarity with streaming. You soon discover that the breadth of content out there requires the frequent tap of a ‘Buy’ or ‘Rent’ button, even if you already have access to one or more subscription services, because those subscription services often don’t have the movie you want.”

Galen Smith, Redbox: “Redbox — at the box and On Demand — offers new-release movies that subscription services won’t have for months, years or ever. ‘Back to the Movies’ is a Redbox initiative that was soft launched in August 2018. It speaks to and reminds people what movie watching used to be, the nostalgia it creates for so many people, and why we need to get it back. Entertainment consumption has become a solo event of endless scrolling, binging for hours, or sitting in a room with everyone on their own devices. But being together is missing. So with our Back to the Movies initiative, we are encouraging consumers to take a step back. Watching a movie used to bring people together, and we need to make an effort to do it again. And just because you have an all-you-can-eat solution, some of the best content is not available in subscription. Redbox provides the best content at the best value.”

Jonathan Zepp, Google Play Movies & TV: “The subscription streaming model offers a compelling value proposition for many users, but a lot of great content is not available in that model. That is especially true for users who value earlier access to the most popular new-release movies. I’d love to see the industry articulate the value proposition of the transactional model relative to subscription and ad-supported options, especially around content availability. We are thinking a lot about how to make this awareness more intuitive within our ecosystem.”

What makes your digital service unique?

Douglas: “Fandango is the only company out there in our space solely dedicated to the full entertainment lifecycle, from pre-release awareness and trailer buzz through Fandango MovieClips to the first reviews on Rotten Tomatoes, advance tickets on Fandango to home entertainment on FandangoNow. One might guess that’s just an internal operational benefit, but it’s actually a boon for consumers too. For example, this year we were able to be a big part of the awards season conversation, across Fandango, FandangoNow, and of course Rotten Tomatoes as well. Fans flocked to our network looking to catch up with the year’s best movies, knowing that Fandango could give them access to all the awards contenders in one place, whether the films were only playing on the big screen or already available at home.”

Smith: “Three things. First, choice. Redbox is dedicated to making Movie Nights memorable and meaningful events that can be enjoyed across a wide variety of formats and price points. DVD rentals start at $1.75 a night, Blu-ray Disc rentals start at $2 a night and 4K UHD rentals in select markets for $2.50 a night. Via Redbox On Demand, Video On Demand rentals start at $3.99 a night for new releases. Consumers can also purchase previously rented movies and games at the box or through On Demand via electronic sellthrough.

“Second, value. Enhancing our value at the box, our loyalty program ‘Redbox Perks’ rewards customers with points for free rentals when they rent or purchase movies at the box or On Demand. The program now has more than 32 million members, with more than 3 million new customers joining in 2018 alone.

“And, third, marketing. Recent promotions, such as ‘Stream On Demand, Get a Free Physical Rental’ have proven to drive both On Demand and physical rentals from new and lapsed customers. Redbox Perks includes three tiers (Star, Superstar, Legend) to recognize our most valuable customers with special benefits; and badging that gives them fun challenges to earn serious bragging rights. Related to our Back to the Movies initiative, a new ‘Family Fun’ badge is earned when Perks members watch three movies that bring the family together for Movie Night. Also, our incredibly popular ‘Spin’ series offers gamified promotions like Summer Spin and Winter Spin that give customers the ability to win instant prizes and be entered for larger prizes (entertainment packages and fun trips).”

Zepp: “Since our launch we have worked to constantly iterate and improve the experience for consumers. This includes establishing a global footprint. We are … available in more markets than any other transactional service in the world right now.”

What key moves/strategies have helped grow the transactional business at large and at your service in particular in the past year?

Douglas: “We were early adopters of 4K back in 2014, and it was a good bet for us to be first-to-market in 4K in those early days. That part of our business has grown over the years to become a truly significant part of FandangoNow in the past year. 4K has become one of the main ways that mainstream consumers make the transition from physical to digital. Last year, we also began a concerted effort to converge the FandangoNow experience across all of our apps, whether you are using Web, mobile, one of our connected TV apps, or of course our native experience on Roku. I’d say right now, our 10-foot experience on connected TV’s is the best in the market.”

Smith: “We’ve built out a talented and dedicated team to support the Redbox On Demand business across product management, technology, content acquisition, merchandising and marketing. Further, our service offers access to consumers that no other digital retailer can provide, which makes us an incredibly valuable partner. We are expanding the category, and for that I am excited about the year ahead.”

Has the studio strategy of giving digital movies a two- or three-week window over the DVD and Blu-ray Disc release proved effective? What else would you like to see the studios do?

Smith: “Each of the studios would need to opine on its effectiveness across the broader base. For our segment of the market, many of our consumers simply cannot or are not willing to pay $15 to $20 for a movie. It’s one reason our rental business is much larger than our electronic sellthrough business. There is a marketing benefit in letting our consumers know a movie is on its way to the kiosk and VOD.”

What have been your key marketing/promotional efforts in the past year?

Smith: “Redbox recently relaunched the brand, including digital and TV spots as well as sponsorships, such as the Redbox Bowl on New Year’s Eve. Our Perks loyalty program has become a major marketing engine for Redbox with new badging opportunities that range from seasonal and title-specific marketing to promotional support. We’re proud of our Back to the Movies initiative that has launched across Redbox social media channels and through media partnerships with Attn: and Scary Mommy (media companies leveraging social media).”

Netflix has made content recommendations a hallmark of its service. Can that technology be applied to the digital retail market?

Douglas: “Recommendations are already part of what we do at FandangoNow, and it continues to get better and better. In the case of Fandango, it comes down to personalization more than discrete recommendations — this is a big focus for us.”

Smith: “Definitely. Personalizing an experience for a consumer is important. Even though we try to curate content for consumers, we want to make sure that the most relevant content is recommended to improve their experience. To accomplish this, we have a new recommendation engine rolling out to all of our platforms that leverages our history of rental occasions over the past 16 years to suggest the content the consumer may want to watch most.

“To augment this, we have invested heavily in our Marketing Analytics team to help refine the algorithms that drive our recommendations. In 2018 we developed an enhanced customer segmentation and targeted marketing programs aligned with these segments. These campaigns are designed to drive repeat visits for new customers, increase frequency for engaged customers, and grow retention among our long-tenured customers. We continue to build additional machine-learning models (artificial intelligence) to optimize our promotions and deliver personalized recommendations to our customers across our storefronts. In the process, we are driving incremental trips and making the customer experience better by surfacing the most relevant titles to our customers in our outbound marketing and on our storefronts.”

Uniform pricing remains a mandate among digital platforms — unlike among packaged-media retail. Will there ever be loss-leader pricing on new-release digital titles?

Smith: “Redbox is in a unique position to drive value through our Perks loyalty program that earns physical rentals for On Demand and box transactions. We also work closely with studios to offer and promote promotional temporary price reductions on specific titles.”

A hallmark of packaged media has been special features and bonus material. Why aren’t those features included and/or marketed for digital?

Douglas: “They are included to some extent, and most of the digital retailers, including FandangoNow, have tried and tested various ways of surfacing this content. It certainly was a great way to entice consumers to buy in the physical era, whether or not the content was ever watched by most buyers. I think the bar is higher for digital and as an industry we need to make this marketing tactic even more relevant in the digital era.”

Smith: “That’s a great question. We love having the special features on our physical discs but would also love to have them on digital purchases as well.”

The Sky Store in the U.K. includes a DVD with any digital movie purchase. Any plans to replicate that strategy in the United States?

Smith: “We don’t have that strategy specifically, but if you think about our loyalty program, we are trying to encourage consumption on both digital and physical by awarding points for digital transactions that can be used on physical product. We think we can uniquely bring the two worlds together.”
Netflix is partnering with telecoms and pay-TV operators to offer discounted and/or free service in exchange for access to new subscribers.

Would digital retail consider partnering with SVOD to sell the latter’s original content in addition to including free Netflix access with each digital transaction?

Douglas: “Everything is on the table, as long as it supports our core Fandango consumer brand promise, which is to provide premium content, whenever and wherever fans want to see it, whether it’s the theater or at home. We’re seeing new models — and more acronyms! — every day, and I’m so grateful to be a part of such an exciting era of growth and innovation at Fandango.”

Smith: “Unlikely. It makes sense for someone selling bandwidth and data to partner with Netflix so that their consumers use more bandwidth (Comcast, T-Mobile). For Netflix originals (or Hulu or Amazon, for that matter) we would happily offer their content to our consumers at the kiosk or on VOD as available. In fact, we offer a number of their originals today. It is great for us as it offers consumers the opportunity to try an original at a great value, and if they like it, we can be a great acquisition channel for the respective SVOD service. Not every consumer will want to commit to a monthly fee, let alone multiple services, so we think we can stand in the gap and offer content on a transactional VOD and physical basis to help extend reach.”

Digital Retailers to be Honored in Second Annual Fast Forward Awards

Media Play News Feb. 19 announced that four digital retailers will receive the second annual Media Play Fast Forward Awards, honoring people, technologies, organizations, products or services that move the home entertainment industry forward.

This year’s honorees are Cameron Douglas, VP of home entertainment at FandangoNow; Google Play’s Jonathan Zepp, Head of Media and Entertainment; Galen Smith, CEO of Redbox; and the team at Apple iTunes (the company asked that no individual be singled out).

With streaming continuing to dominate the home entertainment business,  the transactional video-on-demand (TVOD) model is more important than ever to the Hollywood studios.

Subscribe HERE for FREE Daily Newsletter!

TVOD — both electronic sellthrough (EST) and a la carte streaming — also posted significant gains in 2018, thanks in large part to aggressive and innovative digital retailers.

FandangoNow has been revving up its promotional muscle and is aggressively tying in digital purchases and rentals with its movie-ticket-selling sister company.

Google Play Movies & TV is on a big 4K push, automatically upgrading customers’ past movie purchases to the new format, so they can stream them in 4K, even if the movies were originally purchased in standard or high definition.

Redbox has nearly doubled the selection of films and TV shows available on its year-old digital movie store, Redbox On Demand, and last December announced a new deal in which its app is featured on all Vizio Smartcast TVs — in addition to TVs from Samsung and LG.

And Apple’s iTunes service began the year with a game-changing deal with No. 1 TV manufacturer Samsung. New Samsung SmartCast TVs will allow consumers to access their iTunes movie and TV show libraries through a new app. They’ll also be able to buy new movies or TV shows directly through the app.

The Media Play Fast Forward awards are an outgrowth of the Home Entertainment Visionary Awards, which were launched in 2002 by the now-defunct Home Media Magazine. Comcast’s Brian Roberts was the 2017 honoree. Warren Lieberfarb, the father of DVD, was the first, back in 2002. Other honorees have included Sony Pictures’ Ben Feingold, Samsung’s Tim Baxter, and Walmart’s Louis Greth and Chris Nagelson.

The four digital retailers will be profiled in the March issue of Media Play News‘ monthly magazine, available in both print and digital editions, and honored at a luncheon in Los Angeles at a date that has not yet been determined.

A portion of the proceeds of the luncheon will benefit Caterina’s Club, a Los Angeles charity that provides warm meals, affordable housing assistance, and job training to homeless and low-income families throughout Southern California.

Redbox, Sony Pictures Extended Disc, Digital Distribution Pact

Redbox and Sony Pictures Home Entertainment (SPHE) on Jan. 7 announced a new multi-year distribution deal that continues to make SPHE DVD and Blu-ray Disc titles available at Redbox kiosks on the day they are released.

Additionally, as part of the deal SPHE titles will also be available on Redbox On Demand, the company’s year-old digital retailer that allows consumers to buy and stream movies and other content over the Internet. Redbox  On Demand is considered to be one of the big eight digital retailers.

“Sony Pictures Home Entertainment continues to be a great partner in making their content accessible to Redbox consumers no matter how they want to watch it,” said Galen Smith, CEO of Redbox.  “We’re excited about their 2019 content slate and look forward to making it available at our kiosks and through Redbox On Demand.”

“Redbox continues to be an important distribution partner for our content,” said Jason Spivak, EVP of distribution at SPHE. “At Sony Pictures Home Entertainment, we are committed to satisfying all the ways audiences engage with entertainment, and our deal with Redbox is an important part of our efforts to provide a wide range of options for our consumers.”

The new deal goes into effect with SPHE’s latest and upcoming home entertainment releases, including Goosebumps 2Spider-Man: Into the Spider-Verse, and Holmes & Watson.

Redbox has distribution deals in place with all major studios except Walt Disney. The company has always stocked DVDs and Blu-ray Discs from Sony Pictures and Paramount Pictures as soon as they are released, but 20th Century Fox, Universal Pictures and Warner Bros. used to hold back releases from Redbox for as long as a month because the studios feared rentals would cannibalize sales, particularly since Redbox kiosks are often situated outside big retail stores like Walmart. Universal even sued Redbox over renting its discs.

Over the last year, however, Redbox has negotiated new distribution deals with these studios that have either reduced the holdbacks to one week or eliminated them entirely.