Redbox Instant Ironing Out the Kinks

The Motley Fool is on the road in Seattle! Recently, we visited Coinstar -- now officially renamed Outerwall  (NASDAQ: OUTR  ) -- to speak with CFO-turned-CEO Scott Di Valerio about the 22-year-old company's well-known coin-cashing machines, as well as its more recent acquisition of Redbox, and future initiatives to expand into other aspects of the automated retail market.

With a trial version of Redbox Instant now publicly available, Coinstar is seeking feedback from consumers as it fine-tunes the streaming video offering. The full version of the interview can be watched here.

A full transcript follows the video.

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Eric Bleeker: We've talked a bit about Redbox Instant. Not to push you too much on this, but how much more innovation do you expect we'll see on this? Just as one example, I know ABC, which is owned by Disney, has been in discussions with Verizon  (NYSE: VZ  ) Wireless about excluding the data rates for watching their television shows, as part of a deal there.

You are partners with Verizon Wireless. Are you expecting to be able to leverage some more strengths about Verizon? Right now it's got the unique model that you can get DVDs from your kiosks and be able to watch their library, but how close to the complete vision are we, I guess is what we're asking? How much more do you see coming forward?

Scott Di Valerio: Oh, we're in early days. Again, our partnership is with the Verizon Wireline business, and then we are going to be able to lever the Verizon Wireless out of the house as well. Really, what the JV is focused on today is making sure that the technology is set up to where every time that you turn it on, Redbox Instant, that the stream is good and that there's not buffering, those kinds of things; that we're merchandising the content in a good way.

That's, honestly, one of the things that we're working on from the surveys of our customers; that "Hey, I've got to be able to figure out what's in the kiosk, what's on the subscription, and what do I have to pay extra for, if I want to do a video on demand?" because you can do that, or purchase an electronic version of a movie as well, which you can do on Redbox Instant.

We've really been working on making that a little simpler, a little more clear and intuitive from that perspective, so we're very early days.

Again, we have around 5,000 titles, plus what you get at the kiosk, which is a nice number, focused really on movies. I think as we move along and bring on more subscribers and bring on more CE device manufacturers into the hopper, what you'll see is an expansion of the product as well, over time if you look at the roadmap for Redbox Instant.

I think we're in very, very early days.

Eric: Very early days, all right.

Di Valerio: But it's a great business, and again as I talked about with [Fool analyst] Austin [Smith], it's not a business that we have to be the No. 1 or No. 2 streaming service. It's a great business and it's really not set up to try to be a streaming Netflix or an Amazon killer on the streaming.

It's really set up to provide customers with a great experience at a great value, that bring on a good number of customers, but, again, we can be three or four and be very, very successful at it when you match it up with the overall Redbox business.


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