Redbox enters the game market - Will it lead to Doom?

Tom Barlow

Redbox, the kiosk company that rents DVDs for $1 per day, has spent much of this year bedeviling Hollywood with its game-changing technology. Now, however, the Coinstar (CSTR)-owned firm is elbowing its way into the video gaming world. Last week, the retailer premiered its first game rental kiosk in Reno, Nev. The companies new machines will allow users to borrow Nintendo, Wii, PS 2/3 and Xbox games for only $2 a night.

The threat to game producers here isn't much different than that perceived by the major movie companies. The top-selling game last week was Wii Sports Resort, with almost a quarter of a million copies. At $50 apiece, the software grossed over $12 million in those seven days. If the same games were available via a Redbox kiosk for $2 per night, how much would this cannibalize sales?