Game and movie rental service Redbox announced on Monday, Nov.24 that it will be increasing its rental prices for games, DVDs and Blu-ray discs by 25 percent in the United States starting Dec.2.
The Oakbrook Terrace, Ill.-based DVD rental company is trying to pull in profits despite the already shrinking market that are still watching movies on discs rather than online.
Under the new daily pricing standards, to cost of DVDs will go up by 30 cents from $1.20 to $1.50 while Blu Ray discs will climb 33 percent from $1.50 to $2, Hattiesburg American reports
Aside from DVDs and Blu Ray discs, Redbox will also be increasing the cost of video game rental by 50 percent starting Jan.6. from $2 to $3.
Redbox is not dismissing the possibility that the number of people who may want to rent their products may fall after increasing their prices. The company's earnings went down dramatically by 59 percent to $63 million from January to Sept. this year because sales from Redbox kiosks dropped down 6 percent.
Redbox last increased its DVD prices back in 2011.
However, looks like investors have given thumbs up on the move as stock of Redbox's owner, Outerwall Inc. shoot up 12 percent to $7.83, and, after the announcement, closed at Monday at $71.39-the brand's biggest one-day gain since February 2012.
Redbox is facing increasing competition from other convenient alternatives like video streaming service Netflix, offering just $9 per month subscription that gives consumers quick and easy access to hundreds of TV shows and movies in one click.
Still, many are still choosing to watch movies from DVDs shortly after the end of its premiere, since Netflix has no hold on recently released movies because they cost much higher at $5 to $10 than its regular subscription.
"Redbox remains the best value in new-release home entertainment," Outerwall CEO Scott Di Valerio said.
Outerwall hopes to counter the decreasing number of rentals in their kiosks located at pharmacies, supermarkets and the like by increasing its prices. The company will release details on how it will execute the plan by early February along with its fourth quarter results.
