Q&A: Redbox's Mitch Lowe
The DVD kiosk company isn't afraid of Hollywood studiosIt's been an incredible year for Redbox, the DVD kiosk company that sells $1 rentals at more than 15,000 units in the U.S. That pricing has put CEO Mitch Lowe in the cross-hairs of Hollywood, with the company trading lawsuits with studios. (They claim Redbox undermines revenue models; Redbox has returned fire with antitrust allegations.) Lowe joined in 2005 as COO after helping create online rentals giant Netflix and earlier running Video Droid, a Northern California retailer that morphed during the 1980s from a small network of vending machines into a regional chain.
The Hollywood Reporter: Universal, Fox and Warner Bros. want to prevent their new releases from reaching your kiosks. Assuming they will be successful to some degree, despite Redbox's efforts to buy those titles at retail, when does that start to affect your financial well-being?
Mitch Lowe: What's great is that there are four studios who provide great product and a great alternative for our customers. We are also able -- with some challenges and some additional resources -- to acquire other product, though not at times in the quantity we would like and not without extra cost. By the weekend (after their midweek release), we have those titles in our kiosks, as we're able to buy enough through the retail channels. It's not the prettiest picture and doesn't come without cost and strain on our organization, but generally we're able to do it. Not every time, but generally.
THR: If the studios lose their court fights with Redbox, there's a good chance they will create a sell-through-only window to keep their new releases out of the rentals market completely for the first month or so after hitting stores. How do you feel about that prospect?
Lowe: There's been a lot of discussion about the DVD release time frame and creating an exclusive window between rental and sales. Redbox would at least consider supporting something like that, provided there are a couple things in place. The first one is that all rent-ailers are on the same even playing field. Second, the studios would have to recognize that there is a different demand and a lower value to a rental time frame like that, and there would have to be a recognition of that difference.
THR: The U.S. recession appears to be letting up a bit. What portion of your customer base will you lose once the economic good times return, and how will you replace that business?
Lowe: We've looked at markets all around the country that have high unemployment and low unemployment and looked at the difference in our business. While our business does slightly better in markets where there is higher unemployment, the difference is very, very small. So we think we deliver incredible value whether you have money in your pocket or are on a tight budget. We believe we're converting people to long-time customers.
THR: When will Redbox feel direct pressure from the shift to digitally distributed entertainment?
Lowe: Sometime in the long, long future. It's one of those things that definitely will happen some day, but that "some day" is still a long way out. That's not to say there won't be successful digital services; I think there will be. It's just a matter of when that will become as large as the disc-based business, and I think it still has a long way to go.
THR: Netflix has carved its niche with more upscale, Web-savvy movie fans. Describe the typical Redbox customer.
Lowe: A family with small children who's renting both a film for the parents and a film or two for the kids. They are typically both working in the household and the kids are high school age or younger.
THR: OK, here's the softball lob: What's your all-time favorite movie?
Lowe: It's "Lawrence of Arabia" (1962). I could watch it any time of the day, any time of the week. I love those big-picture films.
THR: Do Redbox kiosks stock that title?
Lowe: Not usually. But we have been expanding our collection of catalog and classics. We call them Redbox Picks.