The turmoil in the video rental market continues. Last week, shares of Netflix fell into the abyss after a weak earnings report and guidance. Now, its Coinstar’s turn. The Redbox parent posted strong earnings on record revenue Thursday but shares plunged anyway after the company said it will raise the price of its iconic $1-a-night DVD rental to $1.20. Adding fuel to the sell-off were reports that some studios are considering efforts to force Redbox to wait 60 days after street date to start renting their new releases instead of the current 28 days. No doubt some of the price hike will go to fund DVD purchases from Wal-Mart by Redbox if the studios try to draw the line at 60 days.
Given Redbox got its start with movie rental kiosks in local McDonald’s franchises, it’s perhaps not surprising that both businesses have been remarkably successful in recent years selling goods for a buck. Both the golden arches and the red kiosks have not only weathered down times remarkably well, but also found new wind in their sails thanks to the power of dollar pricing in an economic storm. While Netflix might think it’s far above the Golden Arches market, it should sit up and take notice.