Redbox is famously known for their red kiosks that provide millions of DVD rentals daily to consumers in locations throughout America. The company was founded in 2002 by McDonald’s Corporation as an automated convenience store with just 15 kiosks selling items varying from milk to DVD rentals.
In the midst of the Blockbuster era, Redbox set precedent and evolved to become the leading movie and game disc rental company in the United States with over 40,000 kiosks located throughout the country. They became the solution for consumers looking to rent new release movies at a low, one-day price.
A true disrupter in the movie rental market, Redbox surpassed 50% market share in 10 years. In 2010 they rented their 1 Billionth disc, and in a series of deals between 2005-2009, Coinstar purchased Redbox for $199.5 million. In fall of 2016, Coinstar, ecoATM, and Redbox (under parent company Outerwall) were purchased by Apollo Global Management for $1.6 Billion. Geneca led software initiatives and management during the Coinstar 100% ownership period.
Problem:
After the 2009 purchase, Coinstar set huge growth targets, but quickly learned their existing software couldn’t handle the desired scale. Redbox identified the market demand, but lacked software with the following capabilities:
- Collection of real time inventory data
- Method of communication to convey inventory data to office and field service employees for restocking
- Necessary reporting options to utilize data for decision making from movie/game stocking selections to optimal vs. under performing kiosk locations.
- Systems for phone or web orders
Additionally, the kiosks’ user interface needed redesigning for simplicity, and their overall POS system needed optimization for speed to handle the substantial increase in kiosks across the country. This meant Redbox needed custom software development for the systems within their kiosks and their central office.
The challenge:
Blockbuster was one of Redbox’s main competitors, and while Redbox offered disc rentals at a lower price ($1/day vs. Blockbuster’s $4.99 for 3-5 days), in 2010 most Americans were not entirely comfortable with the use of a touchscreen. In that year, only 17% of Americans were smartphone users. The first iPhone had launched in 2007 with a primarily upscale male customer base, which was very different from the customer using Redbox. Creating a simple, straightforward series of screens for customers was essential to the growth of Redbox, because they were relying on customers telling friends how easy the kiosks were to use. A frustrating rental experience would stifle the plans for growth.
Goal: Custom software development for two purposes.
Redbox had identified what dissatisfied customers the most at competing retailers: long checkout lines, shortages of discs, and confusing screens. Geneca was hired to develop software to optimize ease of use and speed of service. This required a redesign of both the kiosk software and the office software used to monitor and manage kiosks nationwide.
Results
- 245% increase in revenue for Redbox
Geneca provided successful custom software development for Redbox kiosks and offices that satisfied customers in terms of speed and ease of use. Within the first year of implementing Geneca’s software solutions, Redbox generated a 159% increase in revenue from $774 Million in 2009 to $1.16 Billion in 2010. At the peak of their generated revenue in 2013, Redbox had enormous growth in revenue of 245%.
Redbox’s revenue model relies heavily on their kiosks. Geneca developed custom software that optimized the kiosks’ ease of use and speed of service. Thanks to Geneca’s software, customers could easily navigate the kiosk’s series of touchscreens, and avoid the long checkout lines and expensive rental fees of other movie rental retail stores. Geneca’s software made Redbox’s movie rental kiosk service convenient, not frustrating. Additionally, the reporting and data systems Geneca built for Redbox helped to increase the profitability of each individual kiosk.
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