Blockbuster has another reason to worry about Redbox.

One of the key advantages of Blockbuster, and any other brick and mortar rental operation, is that they can offer video game rentals alongside their movies.  Netflix can’t compete, and Gamefly, the Netflix of gaming, doesn’t have near the distribution network and thus can’t always get the rapid turnaround that Netflix users enjoy.

But Redbox is looking to take a bite out of that by offering two dollar per day rentals of video games.

We’d talked about this before, back when they were just considering it, but now the consideration is a full blown operation, although right now it’s only available in Reno, Nevada and Wilmington, North Carolina.  The test marketing is still going on, so there’s not much information coming out.  But if Reno and Wilmington do well, look for Redbox to expand the operation to most everywhere else Redbox has a presence.  And why not?  The boxes are already in place, the leasing agreements are in place, why not make the boxes slightly larger?

It’s a smart move for Redbox and one that’ll likely do serious damage to Blockbuster and any other game renter on the market.