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.