Redbox is raising prices on DVD rentals from $1 to $1.20 due to higher operating costs associated with debit card fees. It marks the first time in eight years that the unit of Bellevue-based Coinstar has increased daily DVD rental prices.

“The amount was selected to best offset expenses, while keeping our value commitment to customers. We conducted several months of testing and with careful consideration, decided the 20 cent adjustment would work best to keep prices as low as possible,” the company wrote on its Web site.

The new pricing goes into effect on Halloween. It follows a series of high-profile miscues at rival Netflix, including a price increase of its own which caused a customer revolt and the ultimate cancellation of the Qwikster DVD spin out.

Redbox operates about 34,000 kiosks across the country, and the unit just passed $1 billion in revenue for the first three quarters of the year.

Shares of Coinstar are down about seven percent today after the company announced the plan and its earnings. For the third quarter, Coinstar reported revenue of $456 million — a 22 percent increase — and operating income of $65 million.

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  • Guest

    This is an acceptable price increase. $1.20 is still a fair price to watch a DVD. This modest 20% increase is being communicated in a straightforward and rational manner, not couched in misdirection as Netflix infamously did. Although $1 is an easy price to internalize, thanks to credit cards it is possible to charge any amount. In the future I expect a more demand-oriented pricing model: less-popular DVDs may slowly decline in price while new releases might cost more.

    Kudos to Coinstar for continuing to win the DVD rental kiosk market.

  • Pricing Alternatives?

    If passing on the cost of individual transaction fees are the true root of the cost increase, then why doesn’t Redbox also offer a ‘package / punch card’ deal – say 10 rentals for $10 that are tied to a credit card or account. Or if that is too difficult for short-term infrastructure and development costs, offer a ‘rent 3 DVDs for $3 at the same time’ option.

  • Anonymous

    I don’t think it is that big of an increase and it is reasonable. Everyone goes through increases at times and this one is good. I think it is great they are going to try to get out some streaming also. For me I am happy to stay with Blockbuster through my provider/employer DISH Network. . I have the Blockbuster Movie Pass with them and I get so many options. For only $10 a month I get streaming, mail-in DVDs, in-store exchanges, over 20 premium channels, and games and Blu-ray DVDs at no extra charge. The best part is that I get new releases 28 days before Redbox or Netflix. This is definitely the way to go.

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