February 6, 2012: Recently, there's been a large shift in the entertainment industry, specifically in DVDs. Not long ago, Blockbuster and Hollywood Video reigned supreme as the superpowers of the industry, but a paradigm shift brought in by Redbox made DVD's more available to all. Based on Porter's Activity Based Advantages, Redbox introduced themselves as a the low-cost comparative advantage with a broad scope of reach.
Redbox experienced extreme success very quickly. This was mostly due to their very easily accessible kiosks that operated with lower overhead than having a full staff and a building to supply DVD rentals. The DVD's were new releases and cost only one dollar. Becoming the 'Walmart' of DVD rentals allowed Redbox to capture the majority of the market within a very short amount of time.
After reducing the competition, and creating barriers to entry by making contracts with local grocery stores, Redbox was in a great position - until online streaming sites made Redbox's threat of substitutes a very real one. Online streaming from Netflix and Hulu brought in new opportunities for customers to get their DVD's even quicker and easier than having to the grocery store. With little online presence, Redbox did not introduce any online services.
Recently, Redbox and Verizon began talking about working together. In my opinion this is an incredible idea and here is why:
Redbox is the low-cost broad-scope superpower of it's industry. Verizon is the broad-scope differentiator of it's industry with massive access to the customers that often pick Netflix and Hulu over Redbox: mobile users. Verizon and Redbox would be able to offer both online streaming with access to mobile devices and internet TVs, as well as a physical DVD rental service that makes Redbox already very successful. With Redbox's DVD services and physical kiosks in place, Verizon could differentiate itself from the competition it faces by offering actual DVDs to rent. Likewise, Redbox could offer an Online service that reaches mobile customers, their largest threat. Their activity based advantages compliment each other very well.
my advice, go for it.
.jpeg)
