Redbox readies $2 game rentals

After testing game rentals through its kiosks in 5,000 locations, the company will expand the offering to 21,000 of its more than 27,000 sites around the U.S.

Redbox plans to start renting out games at the vast majority of its U.S. locations later this year.

Starting in June, 21,000 Redbox locations will feature Xbox 360, PlayStation 3, and Nintendo Wii titles, the company said yesterday. The games will be available for $2 per day and feature everything from "top releases to popular family and kids titles."

Redbox currently operates 27,000 kiosks around the U.S. It offers DVD and Blu-ray rentals for $1 per day and $1.50 per day, respectively.

In August 2009, Redbox quietly started to rent games in a few kiosks . After some success, it continued to roll out game rentals to more than 5,000 locations around the U.S.

"Redbox has rented more than 1 million video games in less than two years at these locations, underscoring the popularity of video game play in America," Redbox President Mitch Lowe said in a statement.

By doubling down on the game-rental business, Redbox will now find itself competing against GameFly, a Netflix-like company that offers by-mail game rentals to customers. GameFly, which offers over 7,000 games to customers, charges $15.95 per month for a single game rental out at a time and $22.95 a month to have two games out at a time.

In an interview published yesterday with gaming publication IndustryGamers, GameFly co-founder Sean Spector said that he isn't all that concerned with Redbox's move because he believes both rental models can co-exist.

"I think both models can work," Spector told IndustryGamers. "Look at Netflix and Redbox for movies."

He makes a point. Since Redbox's founding in 2003, the company has performed well alongside Netflix. During the first quarter of 2011, for example, Redbox parent company Coinstar saw its kiosk revenue increase by 37.7 percent to $362.3 million, compared to the first quarter of last year. All told, Coinstar generated a quarterly profit of $8.5 million, up from the $6.4 million it made last year. And as Netflix's recent financial performance has shown--it generated a $60 million profit during the first quarter --there's no sign of that company slowing down anytime soon.

 

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