Redbox: Publishers Now Understand Importance of Rentals

Company says publishers now recognize that rentals can be beneficial to full-game sales over time.

You might think that video game rentals hurt publishers like Activision or Electronic Arts because if you can rent a game, why buy it? But the reality is rentals--including those sold by kiosk-based rental company Redbox--actually add incremental revenue for publishers. That's according to Redbox director of video games Ryan Calnan, who shared some new data with GameSpot recently.

Redbox launched its video game rental program in the summer of 2011, and recently commissioned a survey by Interpret to track user engagement. According to this study, 50 percent of Redbox customers will only buy a game if they can try it first. "That was a big number to have come across," Calnan said. "We've been talking to our customers for the last couple of years, and that's the aggregate result that we got."

Depending on the game, Redbox reports a 20-50 percent conversion rate from rental to sale, Calnan said. This is an "extremely healthy" figure that is "good for the industry," he said.

"So what we're seeing is publishers supporting the notion of the recreational gamer bringing incremental revenue to the publishers and that this trial is leading to a conversion," Calnan explained. "Very importantly, with that marketing reach that Redbox has, Redbox has become a very powerful information source to these customers. And Redbox is able to keep these customers engaged and keep the industry very healthy because of it."

According to Calnan, publishers see the value in Redbox's reach--after all, the company has some 36,000 kiosks across the United States in high-volume places like grocery stores and gas stations. But not only does Redbox have thousands of physical kiosks by which it can reach customers, the company also has an email database of 33 million people, 4.5 million people on its SMS text list, 24 million Redbox app users, and 5.5 million fans on Facebook.

It's these relationships that allow Redbox to deliver "hyper-targeted relevant information" to customers, Calnan says. And it's why publishers want to work with Redbox, he argues.

He called out a pair of publisher relationships that were particularly impactful in the past year, the first of which was with Deep Silver to promote open-world action game Saints Row IV. Calnan says Deep Silver came to Redbox because they knew the rental company could help the game reach a wider audience. The two-month week marketing plan included putting stickers on Redbox kiosks ("the best billboard you can possibly imagine," Calnan says), as well as sending out game details and review scores over email and text. According to Calnan, it worked.

"Redbox and Deep Silver believe that the program they put together with Redbox was instrumental in the success of Saints Row IV both at Redbox and at retail sales," he said.

Redbox also partnered with Square Enix to offer a similar program for Thief with similar results. "Thief has been a stellar success story at Redbox in 2014," Calnan said. He's also hopeful that more publishers will jump on board in the future, pointing out that, "[Redbox has] direct relationships with all the publishers" and could offer similar marketing programs in the future.

To go deeper on Redbox's unique role in the gaming industry, we also spoke with Calnan about what kind of impact streaming services like PlayStation Now might have on Redbox's business and when we can expect to see Xbox One, PlayStation 4, and Wii U games in kiosks around the country.

Eddie Makuch is a news editor at GameSpot, and you can follow him on Twitter @EddieMakuch
Got a news tip or want to contact us directly? Email news@gamespot.com

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Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.

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Discussion

15 comments
richten71
richten71

Can't really say that game rentals causes a significant increase in game sales. That information would be hard to determine. Most people rent games with the purpose of completing it so as to never having to purchase the game therefore saving themselves money in the long run. Unfortunately, this does impact profits for publishers. Using the example they used, Thief, which sold just a little over 1.1 million units. For a major game that was released on 5 different systems, I'm sure that number was well below SE's expectations. There's no way to determine which part of those 1.1 million units Redbox is responsible for, but it can't be as much of an impact they are making it out to be. They state that it's a 20% to 50% conversion rate from a customer renting a game to that customer actually purchasing the game, but those numbers would be hard to determine due to certain factors, so I'm wondering where they are getting those numbers from. Sure, it might be good for games where multiplayer is the main focus like Battlefield, Call of Duty, and so on. Not necessarily so for games that may contain multiplayer game play, but the main focus is the single player campaign like Tomb Raider, Watch Dogs, and so on. Once the single player campaign is finished, most people don't bother with the multiplayer aspect, especially if it's not very good, and never play the game again, which is another reason for only renting it. Sure, rentals are a marketing device and any advertisement, no matter how small, is good advertisement, I just don't think rentals are capable of giving publishers the huge sales numbers and in return, the huge profits they are looking for.

NightRain
NightRain

There's so many games I would have probably never bought if I haven't rented them first. Of course rentals helps. I use GameAccess (located in Quebec). It's pretty much like Gamefly... never seen a Redbox over here.

gunnmetal
gunnmetal

hopefully they will start renting games in canada soon i like the 2$ blueray rental

VegasAceVII
VegasAceVII

They really need better selection for Video Games.

Spartan_418
Spartan_418

It's true. I wasn't planning on buying Battlefield 4, because of all the negative buzz surrounding its launch and stuff, until I rented it from Redbox and decided I liked it

Lord_Badmagic
Lord_Badmagic

Two articles in a row about something called 'Redboxs', take the cheque was nice and fat then?

Marky360
Marky360

They already have Xbox One and PlayStation 4 games in Redboxs here in San Antonio but there in a very limited supply maybe like 1or2 in a Kiosk.

AzureBonds76
AzureBonds76

I've been renting video games since ummm errr let's see the Super Nintendo era I believe. Before Blockbuster video stores there used to be your mom & pop ones that rented VHS tapes and video games. Blockbuster came along and put most of those small ones out of business. Although there is still one here close to me in a small university town that still rents DVDs and games.


Now I use gamefly; have been a member since 2005. The whole idea of renting as opposed to just buying is a head scratcher to some, but for me 80% of games I would like to rent but would never pay 60 bucks for. Hence I have played pretty much every xbox, 360, and PS4 game thus far. The fact that I have no life and my dog and girlfriend are understanding helps quite a bit.

Dannystaples14
Dannystaples14

What are redboxes? Like vending machines where you take games out and then come and put them back in later on?

Barighm
Barighm

They needed studies to figure this out? Wow. Game rentals have been an option since long before Redbox. Pretty sure the "try before you buy" people didn't just start showing up with Redbox.

And they actually removed games from the Canadian Redboxes. 

hitomo
hitomo

'hyper-targeted relevant information' ... call the medics

hitomo
hitomo

dat advertisment O.o

AzureBonds76
AzureBonds76

@Dannystaples14  You are correct Danny. There is seemingly one in every shopping mall / grocery store in the US. Japan one ups the US by having beer kegs available at vending machines of course.