A former Netflix executive is having success with his Redbox DVD rental kiosks which are popping up at the rate of one an hour. Redbox currently has over 15,400 kiosks located in supermarkets, discount stores and also at McDonald’s. What makes the rental kiosks so popular? Try $1 a day rentals for starters.

Instead of having to wait for Netflix to mail you a DVD, renters of popular movies are turning to Redbox for their DVD needs. Netflix is admitting that Redbox is going to be their greatest competitor and is looking at ways to counter the Redbox popularity.

According to a recent article it states:

Redbox began in 2002 as a way for McDonald’s Corp. to expand beyond the burger business. A strategy group inside the company tested a few “automated retail” ideas, as it called them.”Vending sounded so last-century,” said Gregg Kaplan, who led Redbox from inception until April, when he became chief operating officer of its parent company, Coinstar Inc.

McDonald’s also tried a machine that made fresh french fries and an 18-foot-wide automated convenience store that sold everything from toilet paper to fancy sandwiches. Only the DVD kiosk stuck.

The group running Redbox grew from operating 12 of the DVD machines to about 900 in three years. By the middle of 2005, Redbox was itching to expand beyond burger joints, and McDonald’s agreed to let it seek out another partner.

Coinstar already had a national sales team placing machines that converted loose change into bills in supermarkets, drug stores and other retailers — relationships it could use to pave the way for Redbox kiosks, too. In 2005 and 2006, Bellevue, Wash.-based Coinstar invested $37 million in Redbox and took majority ownership, and this year Coinstar bought out McDonald’s and other investors for up to $25 million.

As Redbox continues to grow the competition could be a boon to consumers. Netflix may be forced to lower their rental pricing of Redbox continues its popularity.

What do you think? What’s your personal DVD rental favorite outlet?

Comments welcome.

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