Negative change in contracts with movie studios (price; discontinue)
Companies like Netflix that have been in the movie streaming industry for many years, and have a large portion of the market for streaming movies make it difficult to others to enter into the online movie rental industry. Netflix has already established a large library of movies and TV shows available for its members. It would take Redbox a number of years and resources in order to catch up with the infrastructure that Netflix already has available and ready for the consumer right now. Redbox would need to analize the opportunity cost of going into a new market or staying and investing in the current kiosks market and making sure that it is the best it can be. Redbox may be subject to others entering into the kiosks market to tap in on a low cost profitable business model. Blockbuster announced the intentions of entering into the kiosks market, which would have taken some of Redbox's share of the profits in a small percentage. However, in 2012 Redbox purchased Blockbuster kiosks business. According to LA times:
That evidence was clear Monday as Redbox, the nation's largest DVD rental company, agreed to spend up to $100 million to acquire Blockbuster-branded DVD kiosks operated by its largest rival, NCR Corp., adding about 9,000 machines to its existing 35,400 (LA times 2012).
It is apparent that with Redbox's strong financial position in the marketplace it will be difficult, but not impossible for other kiosks movie rentals to appear.
SWOT analysis conclusion:
In Conclusion, the SWOT analysis shows that Redbox has many strengths to be profitable and has the potential for future growth in the industry. The DVD movie rental industry is still strong with the customer demand for the Blu-ray experience in watching a movie. However, Redbox may be susceptible to the creative deconstruction of the DVD, as more and more consumers gravitate towards VOD and streaming, and it would be inevitable that Redbox would suffer financially. According to Digital Entertainment Group; Think video streaming, from services such as Amazon and Netflix, is killing physical discs? Not quite yet, Blu-ray sales ere 28.5 percent higher in the first quarter of this year than a year ago (DEG 2013). Thus, as the Blu-ray player is a compliment to physical DVD's, and the Blu-ray player sales are growing, it is apparent that consumers demand for the physical DVD still exist. Consumer Reports Stated that:
Retail spending on discs remained strong, indicating that physical and digital formats will continue to coexist in the marketplace. While overall disc unit sales were down 6 percent form the previous year, sales of movies and TV shows on Blu-ray continued to offset the decline in DVD sales. Sales of Blu-ray disc grew by 7 percent and accounted for 20 percent of total disc sales, up from 18 percent the previous year (Consumer Report 2013)
For now, Redbox is in a position to fulfill...