Thursday, December 10, 2009

Redbox: The early years

Redbox, operator of those popular red DVD rental machines, was almost called Tik Tok DVD Shop.
Gregg Kaplan, one of the founders of Redbox, shared that tidbit and others about the early days of the company in a speech Nov. 10 at the KioskCom Self Service Expo in New York City.
I had the chance to interview Kaplan, now president and chief operating officer of Coinstar, after his speech. Coinstar purchased Redbox in February and Kaplan joined the parent company. We discussed movie studio issues with Redbox and Coinstar’s future in automated retail. Read the story at Investors.com.
Redbox officially launched in 2004. But during two years of beta testing, it experimented with every aspect of the business, including its name. It tried Tik-Tok EZ Shop and Tik Tok DVD Shop before settling on Redbox.
“In the first two years, we went through probably about 50 different business models,” Kaplan said. The company experimented with pricing, selection, locations and the user experience for automated DVD rentals.
“We tested 99 cents a day, $1.50 a day, $1.98 for two days, $2.97 for three days, and by the way, even today we’re testing different price points,” Kaplan said. Today it rents movies for $1 a day.
The selection of DVDs in its machines ranged from 28 titles to 300 in the early years. Redbox eventually settled on 200 titles per machine.
In addition to grocery stores and McDonald’s restaurants, Redbox tried placing machines in office buildings, hospitals, apartment buildings and busy street corners. Since then, it’s tested machines in airports and casinos.
It didn’t have many machines in the early days. It ended 2002 with 12 kiosks and 2003 with 35 kiosks. Today it has more than 21,000 kiosks nationwide.
Kaplan, who was chief executive of Redbox, pushed to make the user interface on the machines as simple as possible.
Early designs for the touch-screen interface included flashy graphics (namely a rampaging dinosaur), but those were spiked in favor of big buttons.
Kaplan recounted the development process:

“When we first designed the GUI (graphical user interface) for Redbox, we had a very creative graphic designer come in. We described what we wanted; he went away for three weeks and came back (and showed us what he came up with).
There was a red dinosaur – a T-rex – charging towards you as the user, a la ‘Jurassic Park.’ And there at the bottom were two little buttons that said “Rent here” and “Return here.” And I looked at him and said, ‘What is this? What’s with the dinosaur?’
And he said, ‘Well, you know, this is a movie concept like ‘Jurassic Park’ and I thought it would be exciting and it would be cool’ … and he said ‘Isn’t that great?’
And I said, ‘Well, we’re trying to convert users here. We’ve trying to get people comfortable with a kiosk. How about we make those buttons a little bit bigger?’ And he said, ‘Alright, I’ll come back.’
So another two weeks go by (and he shows us what he’s done) and the same damn dinosaur is still charging on the screen. The buttons have gotten slightly larger … By the way, we’re running up against deadlines to get these machines out into the field … So I turned to him and said, ‘Alright, you’ve got to get rid of the bleepin’ dinosaur. This has to be so easy that my grandmother can use this. And first of all, my grandmother is going to be scared by the scary dinosaur. And my grandmother can’t see all that well and if you have buttons this small it’s not going to happen. I want big buttons and all it should say is “Rent here” and “Return here.”’ And that’s essentially how we started.”


Since then, Redbox has added another button for “Online reservation pickup.” But the main screen is still very simple.
“If the GUI and user experience feels like an airline cockpit, it’s probably not going to work. It’s hard enough to convince a consumer to use a machine to begin with,” Kaplan said.
Redbox is now testing the rental of high-definition Blu-ray Discs and video games.

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