Redbox Counters Disney With Amended Lawsuit

The day after the Walt Disney Co. filed an amended lawsuit against Redbox alleging copyright infringement, the kiosk vendor countered with its own amended litigation.

The suit, filed April 10 in Los Angeles District Court, accuses Disney – and new co-defendant Anderson Merchandisers LLC – of copyright misuse, false advertising, unfair competition and “tortuous interference” regarding its ability to sell digital codes included in Disney packaged media combo packs.

Redbox is seeking antitrust treble (“triple”) damages and injunctive relief against Disney and Anderson Merchandisers.

The kiosk vendor said it filed the countersuit following a Feb. 20 federal court ruling that both denied Disney a preliminary injunction against Redbox and found Disney committed copyright misuse on 20 of its most recent movies.

Disney alleges that the digital codes included in combo packs cannot be sold separately. It filed initial litigation against Redbox last November. Redbox is selling the codes at a significant discount to the retail cost of standalone digital purchases on third-party platforms.

“Disney wants to eliminate low-cost options like Redbox in order to force consumers to pay as much as possible for Disney’s content, even after Disney has already been fully compensated when it first sells that content to a distributor or retailer,” read the complaint.

Redbox said Disney has not only failed to correct its false advertising to consumers but has doubled down on its unlawful campaign against Redbox with the home video release of three recent titles: Coco, Thor: Ragnarok and Star Wars: The Last Jedi.

“Incredibly, Disney complains that consumers may believe these titles, as well as [upcoming] Black Panther, are somehow inferior to those of other studios simply because Redbox offers them at low prices,” read the complaint. “We look forward to advancing our case to an ultimate victory in court.”

 

Disney Files Amended Redbox Complaint

The Walt Disney Co. and subsidiaries Lucasfilm and Marvel Studios have filed an amended complaint against Redbox, claiming the kiosk vendor infringes copyright law by selling digital codes to its movies.

The complaint, filed April 9 in U.S. District in Los Angeles, alleges Redbox continues to sell separately digital codes included in Disney movie “combo packs,” featuring the DVD, Blu-ray and/or 4K/UHD disc to a particular title.

Disney claims Redbox sells the codes without authorization and in violation of applicable license agreements included in writing with every packaged media release.

“Redbox will continue to knowingly and materially contribute to the infringement of the copyrighted works unless and until ordered to stop doing so,” read the complaint.

The media company last November filed suit against Redbox, seeking to prohibit it from selling codes to titles such as Rogue One: A Star Wars Story and Moana at a discount to what digital copies sell for on Amazon or iTunes.

A planned hearing scheduled last month on a motion by Redbox to dismiss the lawsuit was postponed.

Disney contends Redbox sells codes to the following titles: Coco (2017), Pirates of the Caribbean: Dead Men Tell No Tales (2017), Beauty and the Beast (2017), Finding Dory (2016), The Jungle Book (2016), Moana (2016), and Inside Out (2015).

Lucasfilm titles include Star Wars: The Last Jedi (2017), Rogue One: A Star Wars Story (2016), and Star Wars: Episode VII – The Force Awakens (2015).

Marvel copyrights include Doctor Strange (2017), Guardians of the Galaxy Vol. 2 (2017), Thor: Ragnarok (2017), and Iron Man 3 (2013).

More importantly, Marvel’s Black Panther, the top box office movie of the year, is slated to release into retail channels shortly.

Disney now wants to jumpstart legal proceedings.

“The obvious consequence of Redbox undercutting of licensee prices is that licensees will likely sell fewer digital downloads of Disney movies and Disney will earn less revenue,” Janice Marinelli, president of Disney/ABC Home Entertainment, said in the compliant.

A Redbox representative was not immediately available for comment.

Redbox Partners with Mediamorph to Expand Digital Footprint

Redbox April 2 announced an agreement with cloud-based software company Mediamorph to help expand its digital distribution of movies and video games.

Last December, Redbox bowed Redbox On Demand, a transactional VOD platform available on the Redbox website, the Redbox app for Android and iOS-enabled devices, as well as Apple TV, Chromecast, LG and Samsung Smart TVs and Roku.

“We sought out a partner to help streamline our avails management, content ordering and pricing management processes,” Lowell Bike, director of product management at Redbox, said in a statement. “By leveraging Mediamorph’s cloud solution and industry-specific systems, we can seamlessly scale our content offering and ramp up to support consumer demand.”

Mediamorph CEO Rob Gardos said Redbox would now be able to “quickly scale,” bringing more content and the right mix of offers to consumers.

“We … look forward to helping the company add even more titles to the Redbox On Demand offering,” he said.

Privately-held Redbox continues to rent DVD, Blu-ray Disc movies and video games through a nationwide network of more than 41,500 kiosks.

Redbox Expanding Nintendo Switch Game Rentals

Redbox March 21 announced the expansion of Nintendo Switch game rentals to kiosks in Denver; Salt Lake City; and Nashville, Tenn.

Combined with an initial rollout in October 2017 in Portland, Ore.; Seattle and San Antonio, more than 2,000 Redbox kiosks across six markets feature Nintendo Switch games for rent.

“Nintendo launched the Switch console about a year ago, and now it’s the fastest-selling console of all time,” said Aaron McDowell, head of games at Redbox, in a company blog. “People love it. And they love it because you can use it whenever you want and however you want.”

He praised the game system’s flexibility.

“The Switch has a screen and two removable controllers called Joy-Cons,” he said. “You can put in a game cartridge and just play it alone wherever you want with the controllers attached. Or if you want to play with a friend, the controllers come off and you can challenge each other. You can also plug, or ‘dock,’ the Switch into your TV or any screen that has a USB port if you want the big-screen experience.”

He added Redbox is more than doubling the number of kiosks with Switch rentals. The initial rollout included 600 kiosks.

Nintendo Switch games available or coming soon in March, include:

  • Dragonball Xenoverse 2
  • Just Dance 2018
  • LA Noir
  • LEGO Ninjago
  • Mario + Rabbids Kingdom Battle
  • Monster Energy Super Cross
  • NBA 2K18
  • Pokken Tournament DX
  • Sonic Forces
  • Splatoon 2

Game rentals are $3 a night. Some previously-rented games are also available to purchase. The full lineup of games available to rent at Redbox is listed here.

Redbox Ups Q4 Usage, Tops iTunes, Google, YouTube, Vudu

The percentage of consumers renting or purchasing movies from Redbox increased in the fourth quarter 2017 from Q3, according to new data from TiVo.

In a survey of 3,000 respondents, TiVo found that 12.5% of respondents used Redbox in Q4 compared to about 10% in Q3. The percentage trailed only Amazon (17.9%), which was up 3.3% from Q3.

Redbox usage topped iTunes (7.9%), Google Play (7.2%), YouTube Movies (4.8%), Vudu (3.7%), CinemaNow (2.2%), Flixster (1.5%) and other (1.4%).

TiVo found that 37.3% of all respondents purchased from pay- per-rental or TVOD services, an increase of 4.6% from Q3. Another 38.5% with pay-TV service are cord-cheaters (those who have pay-TV service and also use a TVOD service), an increase of 5.8%.

The report found that 34.3% of cord-cheaters use both TVOD and SVOD services in addition to their cable/ satellite service, a category that increased 5.2%.

Specifically, 79.6% of respondents spend money on a TVOD rental monthly, an increase of 3.1% from Q3; up 6.7% from the previous-year period and up 11.2% from two years ago.

More than 32% spends $3 to $8 monthly, while 13.3% spends $9 to $11 per month, and this group increased slightly quarter-0ver-quarter; up 4% y/y and up 5.8% over two years.

Finally, of the 37.3% of respondents who use TVOD services, 79% watch content on a weekly basis, an increase of 8.7% y/y and 11.8% over two years.

Hearing on Redbox Motion to Dismiss Disney Lawsuit Postponed

A hearing scheduled for March 5 on a motion by Redbox to dismiss a lawsuit brought against the video rental kiosk operator by the Walt Disney Co. has been postponed for a week, a Redbox spokesperson said.

Disney last November filed suit against Redbox, seeking to prohibit Redbox from selling movie download codes to titles such as like Rogue One: A Star Wars Story and Moana at a discount to what digital copies sell for on Amazon or iTunes.

Disney had argued that the sale of download codes violates copyright law. Disney includes a warning on combo packs that “codes are not for sale or transfer” – a warning underscored in the terms of use, which say the “sale, distribution, purchase, or transfer of digital copy codes … is strictly prohibited.”

On Feb. 20, a federal court in Los Angeles rejected Disney’s motion for a preliminary injunction to stop selling the codes.

The judge ruled that the warning does not constitute a contract restricting what a consumer can do with product purchased at retail.

In a critical finding, Judge Dean Pregerson ruled that “this improper leveraging of Disney’s copyright in the digital content to restrict secondary transfers of physical copies directly implicates and conflicts with public policy enshrined in the Copyright Act, and constitutes copyright misuse.”

The preliminary injunction was granted because the court agreed with Redbox’s contention that Disney was unlikely to prevail on its case.  According to the ruling, “Disney has not demonstrated a likelihood of success on the merits of its contributory copyright infringement claim.”

“From Redbox’s perspective, the court’s decision was a common-sense application of the law of contracts to the unenforceable fine print on the outside of Disney’s combo packs,” Brennan said.

However, the court did rule that “at this stage of proceedings, it appears to the court that the First Sale Doctrine is not applicable to this case” – a critical cog in Redbox’s January countersuit against Disney, in which the kiosk operator maintains Disney digital codes should not be treated any differently than physical discs that it is legally entitled to rent.

The First Sale Doctrine, which video retailers used in the early 1980s to establish their right to rent videocassettes over strong studio opposition, says a copyright owner cannot prohibit a purchaser from reselling a copy of a work, such as DVD.

Disney is the only studio that won’t sell product to Redbox. As a result, Redbox staffers buy Disney DVDs and Blu-ray Discs at retail, and then rent the discs while selling the codes – included in Blu-ray Disc combo packs – separately.

Redbox Offering $2 Off ‘Daddy’s Home 2’ Purchase

Redbox is offering consumers who rent Paramount’s Daddy’s Home 2 a discount if they decide they want to buy the movie.

Through March 6, people who rent Daddy’s Home 2 through Redbox kiosks will be emailed a coupon for a $2 discount toward purchasing the film on DVD or Blu-ray combo pack at participating retailers. The program essentially means Redbox will cover the cost of the rental for anyone who samples the movie and likes it enough to buy it.

Those interested in the deal must enter a valid email address on the kiosk touch screen, Redbox.com or the Redbox mobile app. A link to the coupon will be emailed to the user with their receipt for the rental. Only one coupon will be issued per email address and it must be printed by March 13 and redeemed by March 27.

Court Denies Disney Injunction Against Redbox

In what Redbox ‎director of marketing communications Kate Brennan calls “great momentum” for the kiosk disc rental operator, a federal court in Los Angeles on Feb. 20 rejected the Walt Disney Co.’s motion for a preliminary injunction to stop selling movie download codes.

Disney is the only studio that won’t sell product to Redbox. As a result, Redbox staffers buy Disney DVDs and Blu-ray Discs at retail, and then rent the discs while selling the codes – included in Blu-ray Disc combo packs – separately.

Last November, Disney filed suit, seeking to prohibit Redbox from selling codes to titles such as like Rogue One: A Star Wars Story and Moana at a discount to what digital copies sell for on Amazon or iTunes.

Disney argues that the sale of download codes violates copyright law. Disney includes a warning on combo packs that “codes are not for sale or transfer” – a warning underscored in the terms of use, which say the “sale, distribution, purchase, or transfer of digital copy codes …  is strictly prohibited.”

The judge, however, ruled that the warning does not constitute a contract restricting what a consumer can do with product purchased at retail.

In a critical finding, Judge Dean Pregerson ruled that “this improper leveraging of Disney’s copyright in the digital content to restrict secondary transfers of physical copies directly implicates and conflicts with public policy enshrined in the Copyright Act, and constitutes copyright misuse.”

The preliminary injunction was granted because the court agreed with Redbox’s contention that Disney was unlikely to prevail on its case.  According to the ruling, “Disney has not demonstrated a likelihood of success on the merits of its contributory copyright infringement claim.”

“From Redbox’s perspective, the court’s decision was a common-sense application of the law of contracts to the unenforceable fine print on the outside of Disney’s combo packs,” Brennan said.

However, the court did rule that “at this stage of proceedings, it appears to the court that the First Sale Doctrine is not applicable to this case” – a critical cog in Redbox’s January countersuit against Disney, in which the kiosk operator maintains Disney digital codes should not be treated any differently than physical discs that it is legally entitled to rent.

The First Sale Doctrine, which video retailers used in the early 1980s to establish their right to rent videocassettes over strong studio opposition, says a copyright owner cannot prohibit a purchaser from reselling a copy of a work, such as DVD.

According to Pregerson’s ruling, “Redbox urges this court to conclude that Disney’s sale of a download code is indistinguishable from the sale of a tangible, physical, particular copy of a copyrighted work that has simply not yet been delivered.”

Specifically, the judge said that regardless what Disney’s representations on the disc case may suggest about whether or not a ‘copy’ is being transferred, he disagreed that a ‘particular material object’ exists, let alone could be transferred, prior to the time that a download code is redeemed and the copyrighted work is fixed onto the downloader’s physical hard drive.

Instead, Pregerson contends Disney appears to have sold something akin to an option to create a physical copy at some point in the future. Because no particular, fixed copy of a copyrighted work yet existed at the time Redbox purchased, or sold, a digital download code, the judge ruled the First Sale Doctrine inapplicable in the case.

The two parties will again square off in court on March 5, in a hearing on Redbox’s motion to dismiss the case.

Redbox Unboxed

The video rental kiosk vendor is again thinking digital — just like that other disc rental service, Netflix, did 10 years ago. But what is now the dominant video rental company has a vastly different approach in mind — and a single-minded goal of satisfying both the customer and the bottom line.

 

A little more than three years after abandoning a failed SVOD venture with Verizon, Redbox, the country’s top video rental company, is once again going after the digital holy grail.

This time, however, the Seattle-based company — known for its more than 40,000 bright-red video rental kiosks outside Walmarts, supermarkets and drug stores — isn’t venturing into the subscription-streaming business dominated by Netflix, Amazon and Hulu.

Instead, round two of Redbox’s digital unboxing is focused on the transactional model familiar to users of its vending machines, where you pick a title and pay only for that film or TV show instead of a set monthly price for unlimited viewings of whatever’s available.

The company this past December launched Redbox On Demand, a digital distribution service with more than 6,000 movie and TV show titles available for on-demand streaming or purchase and digital deals with all major studios except for Disney.

On the disc rental side, Redbox has signed content deals with Warner Bros., Paramount Pictures, Lionsgate, Sony Pictures Entertainment, 20th Century Fox and Universal Pictures. The deals are for both DVD and Blu-ray Disc and, soon, 4K Ultra HD Blu-ray Disc.

“It’s very different from our partnership with Verizon,” says Galen Smith, who was appointed CEO in September 2016 just as the company went private. “Our customers come to us for that transactional experience — it’s Friday night, and they want to watch a specific movie. 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. We want to make sure we still capture that demand. It’s complementary to what we’ve been doing for years.”

“Redbox continues to make movies accessible in homes around the country through ubiquitous access to simple-to-use disc rentals, now expanding that ubiquity and simplicity through digital distribution,” says Mark Fisher, president and CEO of the Entertainment Merchants Association. “We expect to see many Redbox customers complement their kiosk movie rentals with additional digital consumption.”

Smith also says he sees Redbox On Demand as a way to transition consumers to the concept of bringing entertainment into their homes digitally. “As you know, transactional video-on-demand (TVOD) is down, and electronic sellthrough (EST) growth has slowed to the single digits,” he says. “We have a whole set of customers who might not have tried TVOD or EST, and we think we can transition them to this new form of content delivery that they’re not yet using.

“It’s a big opportunity for us to get them to stay within the Redbox ecosystem and serve their needs — and it helps the studios, as well, by getting consumers interested in doing a higher transaction.”

Redbox charges customers significantly more to stream a movie online ($3.99 to $4.99 for new releases, $1.99 for older films) than to rent a disc at a kiosk ($1.50). “The kiosk will always be the best value,” he says, “but if you want to watch it without leaving your home the value comes in the form of convenience, the ability to press a button on the remote and get the movie directly from the app.”

Redbox’s latest digital maneuver is not without its challenges. As Smith readily admits, TVOD hasn’t exactly set the world on fire. According to DEG: The Digital Entertainment Group, consumer spending on TVOD slipped 7% in 2017, while spending on EST notched upward just 5.7%, a significantly slower growth rate than in prior years. SVOD, meanwhile, rose an astounding 31%, the DEG reported. More telling are the actual numbers: TVOD and EST together generated an estimated $4.1 billion in 2017, less than half the money generated by subscription streaming.

Convincing consumers to rent a new movie online for $4.99, then, isn’t going to come easy, particularly since they need to download a Redbox app onto their TV that’s linked to Redbox.com. Isn’t that little complex for the average kiosk renter?

“The reality is, a majority of our customers have Netflix accounts,” Smith says. “And we’re OK with that because their subscription streaming services are focused on TV and catalog content, which is complementary to our a-la-carte, new-release movie offering. Redbox consumers want to watch the latest new movies, not wait months or even years for movies to appear on SVOD services.

“By entering the transactional video on demand market, we believe we can introduce a whole new set of consumers to TVOD, reigniting growth in the category which is good for all. It is really about consumer choice — you still have the best value around for new releases at the kiosk while you can choose to use Redbox On Demand for convenience.”

Smith says that while Redbox On Demand — as of January 2018, still in beta mode — is one of the company’s priorities, Redbox is just as focused on beefing up its core kiosk rental business. At the same time that the company is rolling out its online venture, it continues to add kiosks to its network — some 1,800 were added last year alone, bringing the current count up to more than 41,000.

Redbox has also been hard at work negotiating deals with studios to obtain DVD and Blu-ray Disc titles directly on the same day they are released, instead of 28 days later. “A large part of our business is about new movies,” he says. “Consumers want to see what’s new, and if we don’t have it, you might lose that transaction.”

The month-long holdback was initially a condition imposed on Redbox by Warner Bros., Universal Pictures and 20th Century Fox, under the premise that dollar rentals outside Walmart stores were cannibalizing the sellthrough business.

Smith says that premise is no longer valid. “We reach a different segment of the market, so I think there’s a better understanding today of the benefits Redbox provides to the studios,” he says. “This view that sellthrough is being hurt by rental, that’s a pretty outdated view of the world, I think. The studios understand it’s a great opportunity to serve a customer base they might not otherwise serve.”

This changing mindset was also spurred by Redbox agreeing to share rental revenue with the studios. Studios have been down that road before. More than two decades ago, when Blockbuster sought to increase its inventory of hot new releases at a lower up-front cost, revenue-sharing was the solution.

In May 2017, Warner was the first to cave on the 28-day holdback, agreeing to sell new releases to Redbox seven days after they come out. In July, Redbox cut a similar deal with 20th Century Fox. And in December, Universal Pictures came around, agreeing to make its Blu-ray Disc and DVD titles available for rental at Redbox kiosks on the same day they are available for sellthrough. (That deal, which took effect Jan. 2, also makes digital content available through Redbox On Demand).

Smith concedes revenue-sharing played a part in shattering the 28-day holdback. “I can’t get into the particulars,” he says, “but clearly we believe, and have felt for some time, that there was not enough economic benefit for studios from additional sellthrough by delaying a title’s release.” If consumers couldn’t find a new release at Redbox, that didn’t necessarily mean they’d go out and buy it either physically or digitally, Smith maintains. Nor did it mean they’d wait and rent it when it finally did become available. “You may have lost that transaction completely,” he says. “And over time, studios realized that by eliminating the window it was a way for consumers to win and for the studios to win by us generating more revenue — and them sharing in that.”

But revenue sharing isn’t the only reason behind the growing willingness by the studios to sell product to Redbox as soon as it comes out. “There have been big changes in how content has become available,” Smith says. “Subscription VOD didn’t really exist in 2008, 2009, but now consumers have come to embrace SVOD, and while there have certainly been some benefits to that, it’s also something that reduces the amount of money studios receive on a per-transaction basis.

“So we’ve found a way to make it work for us and benefit both our customers and the studios. We want to support this industry. We want to continue to see great movies being made.”

Like Netflix, now the single biggest force in home entertainment, Redbox began as a cheaper and more convenient way to rent DVDs. Netflix used the mail, while Redbox used vending machines stationed outside high-traffic discount stores and supermarkets. Both concepts attacked the No. 1 and No. 2 customer complaints about renting videos at the local rental store: return trips and late fees.

Redbox was initially funded by McDonald’s, renting DVDs from redeployed kiosks — which had originally sold a variety of products under the brand “Ticktok Easy Shop” — for a buck a day. Discs could be returned to any Redbox kiosk.

In 2005, Coinstar, known for its coin and bill-changing machines, bought half the company and began to rapidly expand the Redbox concept. Kiosks were placed outside high-traffic discount stores such as Walmart as well as supermarkets and drug stores. Despite competition from Blockbuster Video, with its fleet of Blockbuster Express kiosks, Redbox flourished. By February 2008 the company had chalked up 100 million rentals, a figure that grew to 1 billion by September 2010. In the meantime, Coinstar had become Redbox’s sole owner, and the company had begun renting Blu-ray Discs and video games as well as DVDs.

Much like the studios and independent video rental stores three decades earlier, Redbox’s growth came despite Hollywood’s best attempts to stop it. After 2005, DVD sales began to taper off, and the studios felt dollar rentals outside big DVD retail sellers such as Walmart would cannibalize sales even more. Lawsuits and countersuits were filed; Warner Bros., 20th Century Fox and Universal stopped selling their movies to Redbox, and Redbox sued on antitrust grounds. Redbox vowed to continue supplying customers with new releases, even if it meant buying them at retail, and began hiring workers to storm Walmarts on new-release Tuesdays.

Ultimately, the litigation was settled, with some studios agreeing to sell product to Redbox, but only after 28 days. Redbox, in return, agreed to not sell used discs.

Redbox rentals peaked in 2013, with more than 772 million transactions. That same year, Coinstar rebranded itself as Outerwall.

Before long the shift to digital — primarily subscription streaming from Netflix, once Redbox’s rival in the disc rental business — began to take its toll. Redbox rentals flattened, then began to fall — to some 587 million rentals in 2015, a 24% drop from the 2013 peak.

In the meantime, Redbox had launched a streaming service of its own, with Verizon, that included kiosk disc rentals as part of the package. Given Netflix’s meteoric rise as well as Amazon’s entry into the streaming game, it was too little, too late — 19 months after the launch the companies abandoned the venture.

Redbox’s fortunes continued to decline as management debated whether to continue pursuing digital or focus on the existing physical disc business. In March 2014 the company hired as president Mark Horak, a 20-year veteran of Warner Bros. who most recently was president of the Americas at the studio’s home entertainment group. Horak was a digital proponent who felt Redbox should take advantage of the vast amount of consumer data it was collecting, but effecting change proved difficult and by the end of 2015 Horak was out.

Less than a year later, in September 2016, Outerwall was sold to private equity firm Apollo Global Management, and its three business units — Redbox, Coinstar and mobile phone recycling kiosk operator ecoATM — split into separate companies. Smith, who had been Outerwall’s CFO, was named CEO of Redbox in September 2016, and promptly set about righting the ship.

“Actually, from my perspective, things may not have been as bad as you might assume,” he says. “We had a lot of leadership changes over a short amount of time, and our employees did a great job weathering that. But one of the priorities I had was to bring clarity to what we are about. We really wanted to go back to our core mission of satisfying consumer demand in a better way.”

Redbox CEO Galen Smith

Galen C. Smith was born in Olympia, Wash., in 1976. He spent two years at the University of Washington and then moved to Illinois to attend Wheaton College, graduating in 1998 with a Bachelor of Arts degree in political science. He initially worked in fundraising, raising money for various nonprofits. “I love meeting with people, building relationships, painting a picture of what could be and getting them to come along and invest with us,” he says.

In 2001, Smith enrolled in the University of Chicago’s M.B.A. program, earning his degree three years later. He briefly went into teaching, and then began working as an investment banker at Morgan Stanley in Chicago.

“I really enjoyed that,” he says. “One of my clients was McDonald’s, and they had this business they were looking to take public. The IPO never ended up happening, but when you’re in the investment banking business you get to know a lot of different companies and a lot of different cultures when you’re working with management. And as I was working with Redbox and then Coinstar, I met a great management team and company culture as well as a business founded on democratizing home entertainment for everyone, making it accessible for everyone. They had this great vision and mission, and I wound up calling the management team and asking for a job.”

Smith joined the finance team at Coinstar in May 2009 as director of corporate finance and by April 2011 had become SVP of finance for Redbox. “I loved being in the business,” he says. “I started negotiating studio contracts and building relationships.” When Coinstar became Outerwall in 2013 Smith was promoted to CFO, a position he held until the company’s sale to Apollo in September 2016.

“They asked me to stay on as CEO,” says Smith, who now lives in Seattle. “And I did. I have a deep passion for what we do, for our employees, for how we go about satisfying consumers and providing them with entertainment. Life is hard, and we give consumers a chance to escape for a couple of hours, laugh a little, watch a movie, play a game, do something that allows them to escape for a little bit.”

Smith says he also likes the relatively free hand he’s been given to run Redbox and take it in different directions. “One of Apollo’s thoughts was if they allow each individual business that previously operated under Outerwall to focus on the best opportunities for them, they’re going to excel,” he says. “It’s a challenge to break up companies, but we went through that and once we did, we’re now in the position to focus on what’s important to us, rather than what’s important to a connected but unrelated business.”

Ash Eldifrawi

Smith’s transformation strategy also included bringing in new talent. In February 2017, the company brought in Ash Eldifrawi as chief marketing and customer experience officer. Prior to joining Redbox, he served as chief commercial officer at Gogo, a global provider of in-flight Internet service. Before joining Gogo in 2010, Eldifrawi was chief marketing officer at Hayneedle, an online retailer of home and leisure products. Earlier in his career, he served as a senior director of brand advertising at Google, where he was responsible for all CPM-based revenue. He also spent time as a managing director at Wrigley, and in management consulting at McKinsey & Company.

Jason Kwong

Then, in October, the company appointed Jason Kwong chief strategy and business development officer. Kwong previously headed up content acquisitions for Fullscreen’s subscription VOD service. He was also VP of content and applications at Sonifi Solutions, which serves approximately 1.4 million hotel rooms worldwide in addition to health care facilities throughout the United States with interactive television, broadband connectivity and advertising. Kwong also worked at Netflix as director of content acquisition focusing on U.S. film deals. He has also held roles at Helio, Virgin Mobile and Warner Bros. Digital Distribution.

“With so much opportunity for Redbox’s future, we felt it was critical for us to add to our talented leadership team,” Smith says. “Both Ash and Jason have helped to enhance the business by refreshing the brand, launching a new loyalty program and bringing Redbox On Demand to market.”

Looking ahead, Smith’s next agenda item is to revamp Redbox’s loyalty program to enhance the company’s relationship with existing customers, to re-energize them — and at the same time step up social media and other marketing efforts to bring in new customers.

“We have customers who have been with Redbox for a long time, and we’re now in the process of launching a new loyalty program,” Smith says. “Our current program has about 27 million members, and we are looking at enhancing that — we’re going through a transition now. We also want to bring new customers in. There are consumers out there who don’t know we offer $1.50 movie transactions. And we’re being very thoughtful about how we go about doing that. We want to make Redbox new again.

“We are so special and unique in what we do, but we’ve been missing opportunities to tell people about it. Now, our marketing people are doing a great job in taking back our voice and explaining who we are, what we are. All of a sudden, I think both internally and externally, it’s starting to feel fun again.”

Redbox Unveils New Loyalty Program

Redbox Jan. 29 has rolled out a revamped loyalty program, Redbox Perks. Replacing Redbox Play Pass, Redbox Perks gives customers more opportunities to earn points, which can then be redeemed for free rentals and other rewards, through a tiered VIP program.

The more customers rent and buy movies and games, either at rental kiosks on online through the new Redbox On Demand program, the more points they get.

Members of the new loyalty program achieve “Star” status after making 10 rentals or purchases each calendar year. “Superstar” and “Legend” can be achieved by making 20 and 50 rentals or purchases each calendar year, respectively. Once members reach each status, they will receive an exclusive welcome gift and additional opportunities to earn points and rewards. In addition to earning free DVD, Blu-ray and game rentals, Redbox Perks members will soon have the option to choose rewards from Redbox partners.

Under Redbox Perks, instead of just earning points per rental, customers will now earn points per night. Additionally, customers now have the opportunity to earn higher point values when renting Blu-ray Discs and video games.

“We’re recognizing and rewarding members for making smart home-entertainment choices with their hard-earned dollars,” said Ash Eldifrawi, chief marketing and customer experience officer at Redbox. “The updated loyalty program increases the value of each Redbox experience.”

The transition for existing members of Redbox Play Pass is simple, Redbox says, as all points will be migrated into the new system. The new points balance will equal the same number of one-night rentals away from a reward as it did under the flagship loyalty program. To see new Redbox Perks point balances with the Redbox app, customers should sign out of their accounts and sign back in.

“Redbox customers deserve significant rewards for significant loyalty,” Eldifrawi said. “We’re excited to offer benefits above and beyond free rentals with the updates to Redbox Perks.”

More than 27 million Redbox customers are members of the current loyalty program, and according to a recent Omnibus survey, nearly half (48%) of all Americans find out what’s new in home entertainment from Redbox.