I think Netflix dodged their biggest threat by investing heavily in online streaming/delivery. I think that's where the future is.
Redbox is certainly cheaper and better for many people, but far more limited on the selection and (currently) with no streaming options. If they add streaming (with a considerably larger selection), they will be a HUGE threat to Netflix.
We use Netflix (and sometimes Redbox) as a replacement for cable/satellite and buying DVDs. Instead of paying $60/month for cable/satellite, we pay $20/month for Netflix. We get a steady stream of movies we actually want to watch (not always the case with cable/satellite), for about the same price as buying one DVD per month. (We seldom watching things more than once, so no need to own them.)
I was truly one of the first Netflix subscribers. I dropped them one year ago because they became too expensive. The streaming disappointed me because of the lack of new titles. I am very happy with a combination of Redbox and the premium channels like Starz, HBO, Sho, Cinemax, etc that come bundled with my FIOS. Starz, HBO, and SHO provide great original programming (the reason I get them) and the movies are just a bonus benefit. Video on Demand is great from FIOS and I watch many great newer movies on demand as part of my premium channel subscriptions. I wouldn't get those channels simply for the movies but all the original material makes it more than worthwhile.
I recently read that the STARZ deal with Netflix is ending and that it will not be renewed for the cheapo price NETFLIX originally got from them - generally considered a sucker deal in the industry where STARZ was the sucker. STARZ is one of Netflix's biggest suppliers of newer movies. Any new deal, I read, will be close to TWENTY times more expensive.
The problem with the distribution system WAS that Netflix was paying far less than Cable for the same content. That is over. Netflix will not be able to survive without agreeing to paying much more money for streaming content from all the major content providers (not just STARZ) and that will decrease their subscriber base because they will have to raise their already high rates significantly.
The future for Netflix is bleak in light of the change in the business model from content providers. Netflix had a good run and I appreciate their early innovation and breaking of the Blockbuster stranglehold. They are, however, in an extremely volatile and fast moving industry. They have a great deal of competition in the streaming market for TV shows and old movies and home made films. Which is basically what they are being relegated to providing. The discs, are a better deal on Redbox. Hot new releases became very difficult to get on disc from Netflix (you can't stream them from Netflix) and I couldn't see paying them a fee every month to get a "very long wait" notice for a movie I wanted to see NOW.
Frankly, If there is a great movie that I want to see right away I go to the movie theater. It is still the best way to view, hear, and enjoy many movies.