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- Growth rates: Sure, Redbox dominates the disc rental market, but it is a shrinking market. New technology is adopted at a faster pace, as both culture and capabilities change. The telephone took 39 years to reach 40% penetration, the computer less than 15 years, and the smartphone under five years. Customers will still visit grocery stores, pharmacies, and locations where a Redbox stands, but in a short while, discs may be seen as prehistoric. Keep an eye on how quickly growth slows, especially as the company attempts to take over the Canadian marketplace.
- Redbox Instant: As this is the future of a majority of Coinstar's revenue, investors should take note of how Coinstar and Verizon (NYSE: VZ ) approach streaming video. Unlike Netflix, the companies can rely on Verizon's own network to avoid any broadband throttling issues. But like Netflix, digital content costs, selection, and price will be key to the success of this service. If it flops, Coinstar should have a backup plan to replace a majority of its revenue.
- Pet projects: The company can automate a number of different retail services. The timing of Redbox -- sandwiched between the fall of Blockbuster and the rise of Netflix -- was impeccable. Now, while the company attempts to find another workable concept, know that most of them will probably fail, just like any business start-up. However, all it will take is one home run to make up for the failures. While a business with diversified revenue streams is best, it's likely that Coinstar will end up optimizing a few key ideas.
More in-depth analysis available
That was just a sample from our new premium report on Coinstar. The company could hit it out of the park with a new streaming platform, or fall flat as it steps up competition with Netflix. For more in-depth analysis, grab your copy of our new report today by clicking here.