9 ms·

People talk about zero interest rate phenomenons and this seems to be like another case. Lots of companies making bad decisions right before the interest rates

People talk about zero interest rate phenomenons and this seems to be like another case. Lots of companies making bad decisions right before the interest rates went up. Wonder how many more bankruptcies we'll see in the next year and a half.

jeffbee 2y ago
I'd never heard of this deal but wow, what a blunder. They merged with Redbox in 2022, assuming $350m in debts and taking over their 27000 vending machines. Since then they managed to dig that hole to a cool billion dollars. Insane that anyone thought DVD vending machines was a great idea in 2022.
- kennethrc 2y ago
  I still see people using them
  - Wistar 2y ago
    So do I. The one at the 7-11 near my office is busy. Always surprises me.
    - kennethrc 2y ago
      > Always surprises me. I think that's "HN Bubble" talking, though. I see a lot of older and arguably poorer people using RedBoxes; after all, streaming is more expensive.
      - dyauspitr 2y ago
        That’s doesn’t make any sense. It’s $2.25/night/movie. In what universe is that cheaper than a $10/month subscription for thousands of movies?
        MBCook 2y ago
        Terrible internet? You watch a movie once a month max or less? You find it less confusing the the stream service mess where movies are constantly moving around and the interface changes all the time so you can never find what you were looking for once you do finally learn it?
        technofiend 2y ago
        That's presumptive on having Internet at all, but even so people make poor economic decisions all the time. Think of title loan and paycheck loan places, grocery shopping at the dollar store. You get the idea. And the fact that at times movies can be released to dvd before they're released to streaming. For that matter even if it's available to stream it may not be available to stream on your service. Does you no good that Suits is currently on Netflix if you're a Hulu subscriber.
        deleted 2y ago
        [deleted]
        hash872 2y ago
        People in rural parts of the country don't have fast-enough Internet to stream Netflix. At least not without it being unacceptably choppy
        JohnFen 2y ago
        People who don't watch more than 4 movies a month? There's quite a lot of those.
        TylerE 2y ago
        Not exactly a brilliant customer base to target. It's like starting a publishing company for people not interested in reading.
        MBCook 2y ago
        If Bob watches one movie a month, you won’t have a good business. If there are thousands of Bobs in one area, you can do just fine. Meanwhile no streaming service will ever get Bob to sign up. As an silly example: no one rents carpet cleaners every weekend, you can still rent carpet cleaning machines. There is enough demand in aggregate for it to be viable.
  - jeffbee 2y ago
    OK but these guys are losing $20 per second running the business.
  - jerf 2y ago
    This may be a case of "there's a business there, but it's not this business". You can always take a sensible business and turn it into selling $1 for $0.75 and go deeper and deeper into debt while buying market share, while at the same time making it impossible for anyone else who wants to actually make money to compete. (I have no idea how to turn this into any sort of law but companies really shouldn't be allowed to just dive into debt, conquer a market via selling dollar bills for 75 cents, then collapse into a puff of compounded interest and massive losses and destroy the entire segment they are in as they collapse. I suppose just not having interest rates at effectively 0 will likely do the trick eventually.)
    - toast0 2y ago
      It almost doesn't need to be a law, because the end of the business is usually a big enough consequence to convince most people to not do it. Otoh, it does kind or suck when it seems to destroy the whole segment, as sometimes happens.
      - MBCook 2y ago
        The problem solves itself until venture capital arrives and decides that pouring $2 billion into a market that doesn’t make economic sense is the sane thing to do just in case one day it becomes a $200 billion market.
    - from-nibly 2y ago
      It doesn't need to be a law, if the government steps out of the way the natural laws will shut the business down. But if the government bails them out then I guess we don't believe in natural laws.
- fbdab103 2y ago
  I think there is a market for them. Think of the many people who still have terrible internet, with no hope for improvement. Getting a weekend movie for significantly cheaper than a theater experience is going to make financial sense. Even if you have streaming subscription(s) you have to break out your abacus to determine if your service(s) have rights to the movie this month. That being said, I have no idea what are their expenses. On the surface, it feels like they should have low costs, so I might be making wild assumptions. Or maybe there is a Bain Capital like situation behind the scenes intentionally destroying the business.,
  - hn_throwaway_99 2y ago
    > Think of the many people who still have terrible internet, with no hope for improvement. Umm, I'm thinking, but the best I can come up with: 1. Rural/extremely out-of-the-way locations. Which means that locating a Redbox that is profitable is going to be extremely difficult because by definition you're in low-density areas. 2. Extremely poor people. Even most lower class people have cell phones these days where you can watch video, so the number of people in reasonably dense areas who can't afford broadband is going to be very low. I do think the "multiple subscription services" issue is a valid point, but in general I think that most Redbox users are likely just slow adopters, similar to folks with landlines. The problem is that customer base slowly but surely goes away.
    - SoftTalker 2y ago
      The local Redbox machines here seem to do steady business. I see people using them almost every time I get groceries. Rural people who can't get internet at home likely can't get good cell service at home either. You only have to be a few miles off of the main roads before service degrades rapidly. Also, the unbanked. People who have money but bad or no credit. But all that said, while it might still be possible to make some money with DVD rental vending in 2024, but it's not a growth business at all.
      - gotorazor 2y ago
        I think the other comments still hold, Just because there are customers, it doesn't mean that you can make profit from them. Not sure what their margins are, but someone in an older comment said that Redboxes require foot traffic of 10k+. These things seem to require at a least weekly visits, restock, etc. Also been awhile since I have seen a Redbox, but do they take cash? I thought they were Credit Cards only.
- mikeryan 2y ago
  They also bought Crackle taking on another 360M in their debt.
- utensil4778 2y ago
  Part of the problem is that public libraries also generally lend DVDs et al for free. If your local library is well funded, most new titles appear on shelves pretty quickly after release. The target demographics of people who can't afford or for whom internet is totally unavailable for streaming are much better served by their public library. It's generally funded by your city, county, or property taxes and pretty much any resident of the locality gets free access. That leaves extremely rural locations as a target for Redbox, which is generally a pretty small market.

jeffbee 2y ago

I'd never heard of this deal but wow, what a blunder. They merged with Redbox in 2022, assuming $350m in debts and taking over their 27000 vending machines. Since then they managed to dig that hole to a cool billion dollars. Insane that anyone thought DVD vending machines was a great idea in 2022.

kennethrc 2y ago
I still see people using them
- Wistar 2y ago
  So do I. The one at the 7-11 near my office is busy. Always surprises me.
  - kennethrc 2y ago
    > Always surprises me. I think that's "HN Bubble" talking, though. I see a lot of older and arguably poorer people using RedBoxes; after all, streaming is more expensive.
    - dyauspitr 2y ago
      That’s doesn’t make any sense. It’s $2.25/night/movie. In what universe is that cheaper than a $10/month subscription for thousands of movies?
      - MBCook 2y ago
        Terrible internet? You watch a movie once a month max or less? You find it less confusing the the stream service mess where movies are constantly moving around and the interface changes all the time so you can never find what you were looking for once you do finally learn it?
      - technofiend 2y ago
        That's presumptive on having Internet at all, but even so people make poor economic decisions all the time. Think of title loan and paycheck loan places, grocery shopping at the dollar store. You get the idea. And the fact that at times movies can be released to dvd before they're released to streaming. For that matter even if it's available to stream it may not be available to stream on your service. Does you no good that Suits is currently on Netflix if you're a Hulu subscriber.
      - deleted 2y ago
        [deleted]
      - hash872 2y ago
        People in rural parts of the country don't have fast-enough Internet to stream Netflix. At least not without it being unacceptably choppy
      - JohnFen 2y ago
        People who don't watch more than 4 movies a month? There's quite a lot of those.
        TylerE 2y ago
        Not exactly a brilliant customer base to target. It's like starting a publishing company for people not interested in reading.
        MBCook 2y ago
        If Bob watches one movie a month, you won’t have a good business. If there are thousands of Bobs in one area, you can do just fine. Meanwhile no streaming service will ever get Bob to sign up. As an silly example: no one rents carpet cleaners every weekend, you can still rent carpet cleaning machines. There is enough demand in aggregate for it to be viable.
- jeffbee 2y ago
  OK but these guys are losing $20 per second running the business.
- jerf 2y ago
  This may be a case of "there's a business there, but it's not this business". You can always take a sensible business and turn it into selling $1 for $0.75 and go deeper and deeper into debt while buying market share, while at the same time making it impossible for anyone else who wants to actually make money to compete. (I have no idea how to turn this into any sort of law but companies really shouldn't be allowed to just dive into debt, conquer a market via selling dollar bills for 75 cents, then collapse into a puff of compounded interest and massive losses and destroy the entire segment they are in as they collapse. I suppose just not having interest rates at effectively 0 will likely do the trick eventually.)
  - toast0 2y ago
    It almost doesn't need to be a law, because the end of the business is usually a big enough consequence to convince most people to not do it. Otoh, it does kind or suck when it seems to destroy the whole segment, as sometimes happens.
    - MBCook 2y ago
      The problem solves itself until venture capital arrives and decides that pouring $2 billion into a market that doesn’t make economic sense is the sane thing to do just in case one day it becomes a $200 billion market.
  - from-nibly 2y ago
    It doesn't need to be a law, if the government steps out of the way the natural laws will shut the business down. But if the government bails them out then I guess we don't believe in natural laws.
fbdab103 2y ago
I think there is a market for them. Think of the many people who still have terrible internet, with no hope for improvement. Getting a weekend movie for significantly cheaper than a theater experience is going to make financial sense. Even if you have streaming subscription(s) you have to break out your abacus to determine if your service(s) have rights to the movie this month. That being said, I have no idea what are their expenses. On the surface, it feels like they should have low costs, so I might be making wild assumptions. Or maybe there is a Bain Capital like situation behind the scenes intentionally destroying the business.,
- hn_throwaway_99 2y ago
  > Think of the many people who still have terrible internet, with no hope for improvement. Umm, I'm thinking, but the best I can come up with: 1. Rural/extremely out-of-the-way locations. Which means that locating a Redbox that is profitable is going to be extremely difficult because by definition you're in low-density areas. 2. Extremely poor people. Even most lower class people have cell phones these days where you can watch video, so the number of people in reasonably dense areas who can't afford broadband is going to be very low. I do think the "multiple subscription services" issue is a valid point, but in general I think that most Redbox users are likely just slow adopters, similar to folks with landlines. The problem is that customer base slowly but surely goes away.
  - SoftTalker 2y ago
    The local Redbox machines here seem to do steady business. I see people using them almost every time I get groceries. Rural people who can't get internet at home likely can't get good cell service at home either. You only have to be a few miles off of the main roads before service degrades rapidly. Also, the unbanked. People who have money but bad or no credit. But all that said, while it might still be possible to make some money with DVD rental vending in 2024, but it's not a growth business at all.
    - gotorazor 2y ago
      I think the other comments still hold, Just because there are customers, it doesn't mean that you can make profit from them. Not sure what their margins are, but someone in an older comment said that Redboxes require foot traffic of 10k+. These things seem to require at a least weekly visits, restock, etc. Also been awhile since I have seen a Redbox, but do they take cash? I thought they were Credit Cards only.
mikeryan 2y ago
They also bought Crackle taking on another 360M in their debt.
utensil4778 2y ago
Part of the problem is that public libraries also generally lend DVDs et al for free. If your local library is well funded, most new titles appear on shelves pretty quickly after release. The target demographics of people who can't afford or for whom internet is totally unavailable for streaming are much better served by their public library. It's generally funded by your city, county, or property taxes and pretty much any resident of the locality gets free access. That leaves extremely rural locations as a target for Redbox, which is generally a pretty small market.