Saturday October 29, 2011 4:56 pm
Trick or Treat! Redbox DVD Rentals now cost $1.20 rather than $1
It's Halloween, and with that, Redbox responds to the trick-or-treat question with a 20% price increase at its 34,000 movie rental kiosks that starts today.
So what's the reason for the 20-cent price hike?
Congress. Specifically, Coinstar cites the recent passage of the Durbin Amendment as the reason why it has to jump its rates (in addition to any other increased operating expenses the company's faced). For those uninformed, the Durbin Amendment comes with two major provisions with which consumers have likely come into contact.
The first provision slapped a limit on the interchange fees that banks are allowed to charge – essentially, the money that they make from retailers whenever a consumer uses a debit card to make a purchase. In response, banks have started to scramble to cover the lost revenue, including going so far as to tell customers that they will soon be assessed a fee for using their debit cards to purchase items.
The second provision, however, directly impacted Coinstar's Redbox service by adding a floor to debit interchange fees as well. And in doing so, reports The Atlantic's Daniel Indiviglio, it's expected to increase Coinstar's transaction fees by around 10 cents for every rental made using a debit card, or around five cents when averaged out across all Redbox rentals.
Of course, there are still some who might cheer Coinstar's price hike – like competitor Blockbuster, for instance, which still offers some movie rentals for the original Redbox price of $0.99 per day. Of course, the pricing structure only applies to most of the company's library titles. Newer movies are subject to a "single-day pricing" setup at increased rates.
But while customers might not balk at Coinstar's price change as much as Netflix subscribers, given the seemingly low rate (measured in cents or percent increase), they might find themselves further frustrated with the possibility of an increased delay between the drop date for new DVD titles and the date services like Redbox are allowed to begin stuffing their machines with the movies.
According to Bloomberg, Hollywood executives are discussing increasing this window from 28 days to 60 – giving new DVD releases a longer period of time to remain exclusive to stores, but hurting services like Redbox, which use new titles as a hook to attract customers.
This article, written by David Murphy, originally appeared on PCMag.com and is republished on Gear Live with the permission of Ziff Davis, Inc.
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