This article is from WeChat official account:Sixingren (ID: guixingren123)< span class="text-remarks">, author: Lianzi, editor: Vicky Xiao, original title: “An ancient “red box” company that originated from McDonald’s sideline business and has a magical history of development, is going to go public”, title picture From: Wikipedia
This is definitely a company with a history that sounds amazing-most young Americans have forgotten it for a long time. It is not an exaggeration to describe this company with its old taste, ashes grade, and old antique. But when you search for the name of this “store” on Google, you will find that there are at least 10 “stores” that happen to exist in major supermarket chains in the United States within a radius of 5 kilometers.
It is Redbox, a video disc rental company. Unlike most people who think it may have disappeared, it was announced this week that it will be available soon.
When the Silicon Stars tried to unlock more of this company’s history, they discovered that this is definitely a pretty amazing company. It originated in the McDonald’s sideline in the early days, and later became one with the green machine Coinstar, which was also in the supermarket. Later, “one of the helms” became the CEO of Movie Pass, a smash hit and collapsed. But when Movie Pass, the company that emerging humans talked about, went bankrupt, this old-fashioned red box company went public.
I. Listing
According to the US technology media the Verge report, Redbox is preparing to go public in the form of SPAC. Regarding the listing of SPAC, the Silicon Stars had an in-depth introduction in the previous article.
During this listing process, Redbox was valued at approximately US$693 million.
In the IPO prospectus, Redbox said that in addition to the movie rental machines in the supermarket, they are also shifting more energy to the online streaming business like Netflix.
About the listing plan, Redbox tableThe plan is to use the cash from the public offering to repay debts and expand new businesses. Redbox currently has 40,000 leased machines and 39 million subscribers across the United States.
Redbox will be listed this fall, and the stock code has been confirmed as RDBX.
Second, a sideline originating from McDonald’s
Before talking about Redbox, let’s explore the origin of this business model.
When it comes to Redbox, Mitch Lowe cannot be missed. The tech giant who co-founded Netflix and later served as the CEO of Movie Pass is actually the inventor of the early business model of Redbox. Not only did he never go to college for a day, he even just graduated from high school.
In 1984, with $25,000 as a starting capital, Mitch established his first company, Droid. The main business of this company is to rent video tapes (older than DVD) using things similar to vending machines.
Mitch himself recalled that entrepreneurial experience described as follows: “I designed a machine with a touch screen, so that customers can watch movie trailers, see reviews and clips in advance. When they are interested in watching this content At the time, they can use this machine to rent movies and videos to watch.” Mitch said that in the early days, he went to Japan to find a producer and developed an early model in 1984. It can be said that this is very similar to Redbox’s business model.
After 14 years of business, Mitch sold the company, but also accumulated enough experience in the film and television rental field.
After that, he met Reed Hastlings and Marc Randolph and founded Netflix together. At that time, Netflix was also a physical film rental business, and there was no concept of streaming media services.
After five years as a vice president at Netflix, he moved to McDonald’s. In the same year he joined McDonald’s, McDonald’s added a side business-movie DVD rental business.
In 2003, McDonald’s was the place with the largest traffic among Americans at that time. Gregg Kaplan, who works at McDonald’s, wants to use this traffic to make more money. At the same time, this new sideline cannot compete with McDonald’s selling food. In order to save space, they thought of vending machines. The earliest name of this project was Ticktok, which was a bit the same as TikTok after many years.
After trying a series of products such as diapers, they began to set up red automatic kiosks at the door to start movie DVD rental business to diners. Gregg’s team named the machine very directly, because the design is a red “box”, so it named it the red box. It is also speculated that Redbox’s red color may be integrated with McDonald’s overall color design-red and yellow.
Mitch Lowe, who just joined McDonald’s, promoted the development of the entire project as a vice president.
At the time, the other two rivals of Redbox were Blockbuster and Netflix. Compared with the higher price of Blockbuster, Netflix needs a monthly subscription to send it home. Redbox, which costs one dollar and one disc, became a popular movie rental company at the time.
After that, this sideline business became more and more prosperous. By 2005, there were already 800 Redbox rental machines in the United States. This year, Mitch was appointed as Redbox COO.
In the same year, McDonald’s sold 47% of Redbox shares to the green box company Coinstar. Since then, Redbox is no longer limited to appearing at McDonald’s, but more with the green box Coinstar in red and green at the door or checkout counter of major supermarket chains in the United States. Coinstar is another inconspicuous but uncomfortable existence in another supermarket for the American people. In simple terms, its model is to help residents turn their coins into credit card money, or exchange them into gift cards for shopping malls and restaurants.
In 2008, Coinstar increased its shareholding to 51%. In 2009, Outerwall, the parent company behind Coinstar, completely acquired Redbox, holding 100% of the shares.
This year, the red with green in the supermarket has finally officially become one, dominating all supermarket chains in the United States. At the same time, Redbox quickly brought huge income to Coinstar, even surpassing its original business to become the pillar of its source of income.
In the following years, Redbox developed extremely rapidly. At the same time, due to concerns that Redbox’s turnover would be hit, the 20th Century Fox, Warner Bros. and Universal Studios sued Redbox separately and refused to sell the movie on Redbox as soon as it was released. But this still cannot stop the development of Redbox-in the second quarter of 2011, 68% of American households could find a Redbox machine to rent movie discs within 5 minutes of driving. Redbox has become an indispensable part of American family life.
Unfortunately, this rapid development encountered a bottleneck in 2012.
In 2012, due to the transformation of Netflix and other companies, more and more young people have become accustomed to watching movies online. However, Redbox has not kept up with the times. It is still running blindfolded in the outdated offline leasing field, buying 100,000 offline leasing machines from rival Blockbuster for $100 million.
In addition, it puts more of its experience offline-even expanding its commercial territory to Canadian supermarkets. The Canadian business was only supported for three years, and it was closed due to insufficient demand. In addition to crossing the border to Canada, it also tried to use vending machines to sell coffee. In short, almost all of its strength is developing more offline possibilities.
Because of being too stubborn about offline development, after 2013, when Netflix gradually took off, Redbox experienced negative revenue growth for the first time after years of skyrocketing. Although it occupied 50% of the offline film rental business in the United States in 2014, at this time, with the changes of the times, the entire offline rental market has shrunk significantly.
3. Unexpected ending
But it’s worth noting that, Even if it goes downhill, Redbox still accounted for half of the physical film rentals in 2014. As of 2017, it still has 40,000 rental kiosks across the United States.
In addition, in 2016, its parent company Outerwall was sold to Apollo Global, and it was announced that its Coinbase and Redbox would operate independently.
In 2017, finally unable to withstand the pressure of streaming media, it began to launch Redbox on Demand streaming media service. In 2019, Redbox bought out the Benjamin series of films, making it its exclusive streaming business. In September of the same year, Redbox set up a film and TV series production department along Netflix’s transformation path, hoping to have more attempts in the direction of self-produced dramas.
But obviously, the transition is a bit late at this time. But what if you say it completely fails? That is also wrong. After all, in the United States, it has tens of thousands of machines and nearly 40 million users, and it will even be launched soon.
At the end of the story, I have to return to Mitch Lowe. In the eight years from joining McDonald’s in 2003 to Redbox in 2011, Mitch pushed Redbox’s business to a climax and left the company before it went down. But he himself has not left the arena of this movie rental industry.
In 2016, he started his own business again and became the CEO of Movie Pass. To put it simply, this is the Netflix model of offline theaters-users only need to pay $9.99 a month to “subscribe” to a large number of theaters to watch unlimited movies offline.
After the company became a smash hit, it has become a classic failure case in the North American business circle. It was the eye-catching price of US$9.99 that finally pushed this company into the abyss-every time a user watches a movie, the Movie Pass will pay AMC US$12.02. On average, platform users watch 2.75 movies per month. In other words, this is a business that is always losing money.
After insisting on losing $21 million every month for a period of time, Movie Pass finally burned out the money. Its share price also fell from a relatively high of 38 US dollars in 2017, down to 5 cents in 2018, and announced its delisting after the final reduction.
Interestingly, when the company newly founded by Mitch has closed down, the antique company Redbox still exists, and even has a listing plan.
When some people are puzzled by the existence of Redbox, someThe comments of netizens woke them up.
In some 18th-tier small cities in the United States, the network may not be so developed. At this time, this red magic box can provide them with the best family viewing experience. The important thing is that the price is extremely low.
The story of Redbox is not over yet-it originated from McDonald’s sideline business, was acquired and split by Green Box, and survived the Movie Pass. This fall, it will finally go public. How to fight monsters and upgrades, how to survive under the grip of Netflix and other streaming media businesses, let’s continue to watch.
This article is from WeChat official account:Sixingren (ID: guixingren123)< span class="text-remarks">, by Lianzi