Redbox To Launch Online Streaming, Prefers Films


While Netflix continues to add opportunities to stream TV episodes, Redbox may stick with films as it launches its subscription-based digital service, expected later this year.

"Unique about our consumer is that they ... consume a lot of movies, and so it may be a different consumer base than the kind of core Netflix one that wants to stream a lot of TV," said Galen Smith, a corporate vice president at parent Coinstar.

Coinstar, which has operated Redbox and its thousands of kiosks for seven years, will partner with another company to launch online streaming. The nature of that relationship could still lead to a move into TV.

Coinstar CEO Paul Davis said that although Netflix has a head start, Redbox has several marketing aces that could help it scale rapidly online. First is simple brand exposure, coming from the slew of people that walk by its rental kiosks in CVS, Wal-Mart, Kroger and McDonald's.



Another is that Redbox has 22 million subscribers in its email marketing bank. It also has about 30 million active credit card users. "We peg our active consumer base somewhere in between that," Davis told investors.

Unlike the rent-as-you-go Redbox kiosks, Davis indicated that with its partner, Redbox's streaming may used as a subscription model a la Netflix.

One impetus behind the streaming initiative is a chance to offer more than the approximately 200 titles Redbox has at any one time in a kiosk. Netflix has been emphasizing streaming at the expense of its traditional DVD-by-mail service, but Davis said Redbox's digital strategy "will be complementary to our kiosks, not compete directly with it."

In Coinstar's last fiscal quarter, Redbox revenue came in below expectations, reported the Los Angeles Times, due to the impact of three studios not offering new releases to the company until 28 days after they went on sale.

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