Teh One Who Knocks
10-30-2011, 11:04 AM
By David Murphy - PC Magazine
http://i.imgur.com/pxdq8.jpg
Have we learned nothing from Netflix?
Customers might very well be asking Redbox – and parent company Coinstar – that very question come Halloween, when the service is set to deliver quite the trick against those looking to use one of its 34,000 kiosks to rent a movie. According to Coinstar, daily DVD rental fees are going to increase from $1 to $1.20, a 20-percent jump, starting October 31.
So what's the reason for the twenty-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 that consumers have likely come into contact with.
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 that 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.
http://i.imgur.com/pxdq8.jpg
Have we learned nothing from Netflix?
Customers might very well be asking Redbox – and parent company Coinstar – that very question come Halloween, when the service is set to deliver quite the trick against those looking to use one of its 34,000 kiosks to rent a movie. According to Coinstar, daily DVD rental fees are going to increase from $1 to $1.20, a 20-percent jump, starting October 31.
So what's the reason for the twenty-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 that consumers have likely come into contact with.
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 that 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.