Redbox Goes Digital with Redbox Instant

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.

Now in public beta, Redbox Instant ushers Coinstar into the streaming video market. In this video segment Scott shares the company's experiences and feedback so far. The full version of the interview can be watched here.

A full transcript follows the video.

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Austin Smith: I wanted to talk a little bit about the progress of Redbox Instant and your partnership with Verizon (NYSE: VZ  ) . I'm wondering if you could maybe just elaborate on that, any progress you guys have going there, or what you're seeing as the early results?

Scott Di Valerio: You bet. Yeah, we're very pleased with our partnership with Verizon, to bring Redbox Instant to the marketplace. We signed that deal in February of 2012, and about 15 months later were able to launch a product through kind of a beta, general availability. We're pleased with it so far.

One of the things we've been really doing is trying to understand from the customer, is there enough content between the around 5,000 titles that you have on the streaming side, as well as getting great new release content from the kiosk?

The surveys from our customers are saying yes, there's enough content, and they're finding great new release content because you get four nights at the kiosk each month on the subscription, as well as the streaming, as we think about the business; that's both from customers who have stayed on and are paid subscribers, as well as ones who churned out of the business, so we're always trying to find the best mix there.

One of the great things about the Redbox Instant business is you basically have the full old brick-and-mortar store available to you.

If you think about it, when you used to go to a brick-and-mortar store you'd walk around the outside walls because that's where the new release content was. We've taken that new release content, and that's Redbox. Basically we've taken those outside walls and put them into 12 square feet. With Redbox Instant, we now have the center of the store available to our customers.

We think it's a great opportunity for our customers, it's a great value for our customers today at $8 for four standard-def rentals a month, plus unlimited streaming, or $9 for Blu-ray, for four nights at the kiosk.

We're really pleased; we think it's a great value for our customers, and as we roll into the third quarter, Redbox Instant will do a lot more work around promoting the service as we've brought on more CE device manufacturers so that people are going to get that 10-foot experience for being able to get it up on the TV in a much broader way.


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