Redbox looks to gain from Netflix rate rise

Associated Press

SAN FRANCISCO

Netflix is giving Redbox a golden opportunity to gain some ground.

Beginning today, Netflix, the largest U.S. video subscription service, will hit its nearly 25 million U.S. subscribers with rate increases of as much as 60 percent. The sticker shock is expected to make Redbox, which rents DVDs for $1 per day through kiosks, more enticing to movie lovers.

Netflix Inc.’s higher prices will drive business to video-rental chain Blockbuster and other home- entertainment rivals too, but none are better positioned to take advantage of the disruption than Redbox, according to Wedbush Securities analyst Michael Pachter.

That’s because millions of people are expected to keep paying for a Netflix service that streams video over high-speed Internet connections but will look for other places to rent DVDs at a low price. Most people won’t have to go far before coming across a Redbox kiosk; two-thirds of the U.S. population now lives within a five-minute drive of one of the company’s red vending machines.

Netflix, based in Los Gatos, has given its subscribers little reason to stray until now. Its service emerged as a household staple during the past few years while bundling rented DVDs through the mail with unlimited Internet video streaming for as little as $10 per month. Keeping both of those options will cost $16 per month under Netflix’s new pricing system. Netflix predicts about 10 million customers will avoid the higher prices by limiting their subscriptions to an $8-per-month streaming plan that doesn’t include the latest theatrical releases available on DVD and pay-per-view.