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Essay / Research Paper Abstract
This 3-page paper critiques an article entitled "Redbox rental prices to rise," which was posted on October 28, 2011. Bibliography lists 3 sources.
Page Count:
3 pages (~225 words per page)
File: AS43_MTredbcrit.doc
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Unformatted sample text from the term paper:
that Redbox is raising its prices. The second is that in doing so, Redbox is likely to risk customer backlash, similar to what happened to Netflix when that movie rental
service raised its prices. The author, Michael Liedtke, attempted to make this story into a Netflix follow-up by using such language as
"the plot twist emerged in Coinstars (Redboxs owner) quarterly report." That report noted that the earnings doubled because of "robust growth" at Redbox. Then the author noted that the "strong
performance" was "upstaged" by the companys decision to raise prices by 20 percent for standard DVDs. He based this belief on the fact that investors were so spooked by the
announced increase, that the companys stock price plunged 10 percent in "Thursdays extended trading." My belief is that this author attempted to create
drama in Redboxs announcement by blatantly comparing it to the Netflix scenario, which is a comparison of apples and oranges. For one thing, the author himself acknowledges that Redbox actually
tested the higher prices and determined there "only would be a slight drop-off in DVD rentals." If this is the case, then why does the author suggest, in the first
paragraph of his article, that the company is risking customer backlash ala Netflix? Lets also examine what, exactly, Netflix did - it went
way beyond simply raising prices. In April, 2011, Netflix announced a split between its streaming video and its DVD business, which it renamed Qwikster (Edwards and Grover, 2011). Customers were
then told that, in July of 2011, rather than being charged $9.99 for both streaming video and DVDs, they would be charged $7.99 for each (Edwards and Grover, 2011). The
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