Redbox raising DVD rental fees by 20 percent

By on October 28, 2011, 12:00 PM

Daily DVD rentals from Redbox will soon cost users 20 percent more per day. Starting Monday, the price for a single day DVD rental will be increased to $1.20, up from the even dollar that they have been at for the last eight years.

Prices for Blu-ray discs and video games at the self-service vending kiosks will remain at $1.50 per day and $2 per day, respectively. The DVD rental fee increase is said to cover an increase in operating expenses which isn’t an uncommon excuse. But in the case of Redbox, there is a bit of truth behind the statement.

A new law that went into effect this month called the Durbin Amendment has, among other things, increased the fee that merchants are required to pay credit card companies per transaction. According to Wedbush analyst Michael Pachter, this fee has increased from around 6 cents per transaction to around 23 cents per debit card swipe. While 17 cents doesn’t sound like much, it adds up very quickly when you are dealing with millions of transactions.

"We remain committed to providing Redbox consumers access to the latest movies at an incredible value," said Coinstar CEO Paul Davis. "This marks the first price increase for a Redbox standard definition DVD rental in eight years."

It remains to be seen if Redbox will suffer the type of backlash that Netflix went through when they increased the price of streaming plus DVD-by-mail services by nearly $6 per month over the summer. That move resulted in the loss of 800,000 subscribers. If nothing else, at least Redbox has a valid reason for the price hike.




User Comments: 8

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Guest said:

If the referenced law is in fact increasing cost per transaction by 17 cents, then I fell the price increase is reasonable. However, I know RedBox charges your credit card on a daily basis. Meaning if I have a DVD for three days then my credit card will be charged three times. So, if RedBox has to pay credit card companies per transaction (and not a percent of the amount) then look into how they charge customers?

If the above is correct, wouldn't it be possible to charge customers only after they return the DVDs? How about selling prepaid cards which can be recharged with cash?

I think businesses nowadays just go for the quickest/easiest way of balancing out their expenses: slapping a price increase to the customers.

Guest said:

Its been $1.20 in KC area for a while now. However, I won't use them anymore. They have a terrible habit of double or even triple charging my card for a single rental.

NTAPRO NTAPRO said:

Wasn't a similar mistake made not too long ago?

MilwaukeeMike said:

More background. The Durbin (From **** Durbin -D Senator from Illinois) ammendment caps the fees that banks can charge to retailers. (This is supposed to cut down on 'big banks' and their 'huge profits' The fees that banks can charge was decreased 80%. This means a lot less money for the banks. But the banks will be offsetting that loss by creating new fees. Bank of America recently imposed a $5 monthly fee on using a debit card. You may have seen **** Durbin on the news telling us to 'Vote with our feet' and walk out of Bank of America. Well... it's his law that caused them to raise prices.

What does this have to do with Redbox? Well... The ammendment also puts a price floor on the transaction fee. That means that for very small transactions the fee will actually go up. So the fees on large transactions go down, and the ones on small ones go up. So the banks create new fees to cover the lost revenue, and companies like Redbox increase costs to cover the increase in expense.

Does that mean banks make less and we have more money in our pocket? No, of course not. But **** can go on the election trail and say he stuck it to the big banks, and he's looking out for the hard working American little guy because of some law he passed.

And yet we have protestors on Wall street calling for more of this nonsense.

Story from today that explains it [link]

Guest said:

Redbox trying to mimic the "success" Netflix had with their price increase? Good luck Red Box

3DCGMODELER 3DCGMODELER said:

go to walmart pay cash for a walmart debit card.. renewable type debit card

i use that for red box...

I have netflix and would never give redbox my debit card info...

MilwaukeeMike said:

haha, It appears I should have used 'Richard' when referring to senator from IL.

Guest said:

I don't really think Redbox will have that much backlash from their 20% price hike. Seeing how their debit card charges went up from 6 cents to 23 cents, and of course movie studio's want more for their movies because they aren't selling as many DVD's. The Netflix increase was just out of hand, Netflix could have raised Revenue for more streaming and movies a number of other ways, why I canceled them right then announced the price hike. I figured I could live without streaming and using Redbox I figured I would rent 6-8 movies a month, not enough to get the Blockbuster movie pass. But the last 2 months I have rented an average of 15 movie's each month, guess I was streaming more then I thought I was. So I decided to give Blockbuster Movie Pass a try, seeing how I work at DISH I probably should have done it from the start, but hey if I can save a couple bucks in my mind I am saving. So now I got set up, 3 months free to start off with, then $10.00 a month for DVD/blu-ray by mail, 20 movie channels on the television, and streaming to the television and computer. Still didn't realize I was that hooked on movies until I sat down to look at the bank statement.

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