Rentals start at $4 for a 48-hour period, while you're looking at spending $10 or more for a purchase.

Redbox is wagering that this model plays into its existing strengths. If you're already used to renting movies from its kiosks, it's not a big stretch to rent online when you'd rather stay home. And since it already has deals to get new releases, it's guaranteed to have titles that may take months to arrive on services like Amazon Prime Video and Netflix, if they ever do.

It's not going to be a cakewalk, mind you. There's still plenty of competition in this space, such as Apple's iTunes, Google Play Movies and Walmart's Vudu. And unlike Redbox's kiosks, there aren't really price advantages. Redbox is mainly banking on its name and physical presence to earn your business. Not that it necessarily need a runaway hit, mind you. On Demand can serve as more of a complement to Redbox's discs, and could help it transition to digital if its kiosks become untenable.