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8/16/2009
06:59 PM
Bob Evans
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Global CIO: JetBlue Genius And Hollywood Lunacy: 5 Essential Lessons For CIOs

Why are Hollywood studios attempting to stifle customer choice by hamstringing two high-growth DVD-rental partners? On the flip side, JetBlue once again leads the way in customer engagement.

Meanwhile, perhaps those older Hollywood competitors that indeed are saddled with such issues should spend a little less time serenading themselves with the world's smallest violin and a lot more time thinking about the extraordinary advantages they have, first and foremost of which is a worldwide audience of tens or hundreds of millions of consumers who demonstrate their near-insatiable appetite for the studios' products every hour of every day in countries around the world.

What those customers want in return is exactly what customers in every industry want: good value for their purchase, more choices, more options, more inclusion in product development and deployment, and a commitment from the seller to deploy technology aggressively to enhance the customer experience and value.

The numbers seem to show that Redbox is delivering what consumers want: In the past year, its number of kiosks in U.S. stores has almost doubled to 17,900, and a new deal to add kiosks in 2,000 Kroger supermarkets across the country should see the total top 21,000 by year-end. And Redbox's year-on-year quarterly revenue increase of 110% pushed revenue to $188 million in its latest quarter.

Take a look at the contrast between the approaches from JetBlue and then from the movie studios:

From USAtoday.com: JetBlue on Wednesday unveiled its All-You-Can-Jet Pass, one of the more interesting airline deals in recent memory. Here's how it works: Buy the $599 pass by Aug. 21, and you’ll get a month's worth of unlimited flying between any of the airline's 56 international and domestic destinations. The pass covers travel between Sept. 8 and Oct. 8. JetBlue says "pass holders will have access to every available seat on every flight with no blackout dates."

From Motley Fool: Leave it to JetBlue to turn the air travel industry into a smorgasbord. The value-priced carrier is offering a $599 pass, promising unlimited travel between Sept. 8 and Oct. 8. It's a bold move, and it's one that is going to create turbulence for its rivals. Legacy airlines are unlikely to play along, yet they may miss out on active travelers intrigued by JetBlue's offer….An industry that has been a historical disappointer has just had its value proposition altered, again. Fasten your seatbelts. It's going to be a bumpy flight.

From the Chicago Tribune: As the promotion became a "trending topic" on Twitter soon after it was announced Wednesday, JetBlue started to see multiple mentions of itself on the site every second. Most were consumers sharing word of the offer, although many peppered JetBlue's Twitter account with questions about how the deal worked. "We were completely bombarded," said Lindsey Petersen, who works for JetBlue's frequent-flier program in Salt Lake City and is a member of the team that helps manage its Twitter account. JetBlue planned to make the monthly pass available through Aug. 21. But after less than 36 hours, officials were worried about having to curtail the promotion because the carrier was running out of seats. The airline has only 65,000 airplane seats to sell each day.

From Motley Fool again: Some Wal-Mart stores have no problem housing Redbox kiosks. Do you think that the world's largest retailer would allow that if the buck rentals were cannibalizing DVD sales? This is going to be an interesting battle. I just hope that the studios realize that they are simply delaying the inevitable. As physical platforms give way to the broader acceptance of digital delivery, they'll all be toast. Movie prices will fall, and physical kiosks will be harder sells.

And on Hollywood versus Redbox, here's the Los Angeles Times: All of those studios are concerned that Redbox's $1-per-night rentals are undercutting more lucrative rentals from other services and DVD sales. On a conference call after the conglomerate's most recent quarterly report, Time Warner CEO Jeff Bewkes compared Redbox to theaters that show movies several months after they premiere: "In general, we think there may well be a role for $1 rental kiosks," he said, "just like $1 movie theaters."

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