Coinstar Feeling Content Penny-Pinch Over Redbox

Content to a video-streaming and DVD entertainment provider is lifeblood; absolutely vital to maintain business. However, Coinstar Inc., owner of Redbox, the identifiably red DVD-rental kiosks found scattered throughout the US, is encountering some difficulty with new release availability.

Redbox has been the underdog, slowly but surely making a name for itself against competitors like Netflix, Amazon, and Hulu. With the announcement of a shorter supply of new releases being provided in the first quarter, in combination with the new expense of generating Redbox’s new instant video-streaming service, the company’s stock took a negative hit on Friday, according to Marketwatch.

Some analysts downgraded the stock on Friday, and it fell nearly 7% in trading to close at $48.47.

Customers and investors can be capricious, demonstrating little to no patience when companies vary their marketing strategies. Do you recall Netflix when the company bifurcated streaming and DVD subscriptions, requiring separate fees for each service? Initially people were outraged and unsubscribed from one or both services in droves. Their stock too took a nasty hit.

Redbox is best known for the $1 quick one-stop rental kiosk of recent released movies outside of local grocery stores or pharmacies, not streaming instant video. The company only released 12 new titles in January, less than half offered in comparison to the January prior. However, Coinstar Chief Financial Officer Scott di Valerio assures more titles will be available in February and March, balancing out the DVD deficit before the end of the first quarter.

Due in part to the lack of new Redbox content, Coinstar forecasts a brief continued decline in earnings. The company does intend to refurbish the Redbox venders, as well as the Blockbuster kiosks it acquired, with additional disc space, allotting for more than 600 the machine typically stores. The company has also entered into an arrangement with Warner Bros., allowing Redbox the rights to Warner’s Blue-Ray and DVD content 28 days post retail sales.

Coinstar is expected to provide nearly 2,000 kiosks throughout Canada within the next year. Currently, Redbox Instant, conjoined with Verizon, is in beta testing. They anticipate offering the instant video-streaming service to customers for $8, a similar price point of other subscription service providers.

[Image via Wikicommons]