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Jeremy Hobson: Well here in this country today prices are going up
at Redbox DVD rental kiosks, from a $1 to a $1.20.
But as Sally Herships reports, Redbox better be careful not to alienate customers like its rival Netflix just did when it raised prices.
Sally Herships: Netflix and Redbox are video apples and oranges. Netflix offers a library of movies and TV; Redbox only new films. Netflix requires membership, and Redbox is pay-as-you-go. The question is, will customers punish Redbox as much for its price hikes?
Kit Yarrow: They will care. They’ll look at this as opportunistic.
That’s consumer psychologist Kit Yarrow. She says for new customers and spur-of-the-moment purchases, 20 cents isn’t a big deal. But when Netflix raised prices, it lost members — some to Redbox. For those rental refugees, the price hike can be a sore subject.
Yarrow: That they switched over from Netflix and now Redbox is cashing in.
Redbox says this is the first time it’s raised prices for DVDs in eight years. It’s passing on costs from a new law that allows debit card companies to charge businesses more for small purchases. The company is hoping to smooth the transition. It’s offering a one-month promotion: certain video rentals at the current $1 price.
I’m Sally Herships for Marketplace.