Coinstar Goes All Hollywood
I knew some major movie geeks back in college. Discussions after class often compared Steven Spielberg to Francis Ford Coppola, and there was this guy who memorized every line of dialogue from Ghostbusters. That's what happens when you minor in film studies, I guess.
Looking at Coinstar (NAS: CSTR) this week takes me right back to those days. Operator of the eponymous coin-sorting machines, Redbox DVD kiosks, and other vending stations, they just can't get enough of the movies. I wouldn't be surprised if the company relocated its headquarters to Hollywood any day now.
Hot on the heels of a brand-new digital-streaming service announcement together with Verizon (NYS: VZ) , Coinstar boosted its DVD-vending fortunes as well. You know the Blockbuster-branded vending boxes that provide some local competition for Redbox? Yeah, those will be painted red soon. Coinstar is paying $100 to fellow vending-machine specialist NCR (NYS: NCR) to take over that line of business.
Blockbuster parent DISH Network (NAS: DISH) plays no part in this transaction. The Blockbuster branding deal for NCR's machines has been null and void since Blockbuster's bankruptcy auction, so the machines really shouldn't be yellow and blue anyway. Now they get a corporate parent that actually cares about DVD rentals.
This deal adds some 10,000 former Blockbuster kiosks to the 35,400 Redbox machines already in service. Some would call this combination a growing threat to casual video titan Netflix (NAS: NFLX) , but I'd have to disagree. Netflix and the vending machines serve very different markets, and are more complementary to each other than rivals for the same entertainment dollar. One is all about new releases and one-off impulse rentals; the other a laid-back pipeline of less-time-sensitive content for a fixed monthly fee. I'll let you figure out which is which.
The Verizon service might step on Netflix's toes, but it's too early to tell. All we know today is that the digital Redbox-Verizon product will consist of "subscription services and more," which makes me think there will still be a focus on fresher stuff and pay-per-view options. If so, the service should scare cable companies and DVD sellers far more than it keeps Netflix up at night.
Yeah, Verizon could cannibalize its own FiOS product a bit, but Big Red isn't planning to expand its fiber network these days anyway. Selling video services over other vendors' broadband connections is a market-expanding idea whose time has come -- and Verizon started moving in this direction more than a year ago.
Add Coinstar and Verizon to your Foolish Watchlist and check back on the details when the companies decide to let the cat out of the bag. Bring a bag of popcorn -- this will be fun to watch.
At the time this article was published Fool contributorAnders Bylundowns shares of Netflix but holds no other position in any of the companies mentioned. A better digital video market is likecatnipfor this movie nerd.Motley Fool newsletter serviceshave recommended buying shares of Netflix. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+. We have adisclosure policy.
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