Redbox hikes DVD rental fees; can it avoid the 'Netflix Effect'?

Coinstar is betting the 20 percent price hike its Redbox DVD rental business--to $1.20 a day from $1--won't have the same impact Netflix (Nasdaq: NFLX) saw when it raised prices and initially separated its streaming and DVD-by-mail operations.

On its website, Redbox, which rents DVDs, Blu-ray discs and games from thousands of kiosks around the nation, said the price change was prompted by an increase in operating costs, including higher debit card fees that went into effect this month.

The price hike affects only DVD rentals and not Blu-ray or game rentals. It goes into effect Oct. 31 and is the first time in eight years Redbox has raised its daily DVD rental price.

The company is counting on the 20 cent bump to not scare off users. Netflix Monday said it lost 800,000 subscribers in the third quarter, primarily due, it said, to the price hike and an announced plan, since canned, to spin off the DVD business.

Redbox a year ago, as it saw its kiosk deployment begin to saturate the market and reduce revenue growth, also said it would launch a streaming business in 2011. This week, the company reafirmed that vision, saying that a plan for a streaming business would be in place by the end of the year.

For more:
- see the Redbox post
- see this Reuters article

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