Redbox's DVD Problem

Shares in Outerwall (NASDAQ: OUTR  ) , formally known as Coinstar, took a hit last week after the company reported disappointing revenue from its Redbox business. Sure, Outerwall managed to tighten its dominating grip on the DVD rental business. But even after expanding its lead there over Netflix (NASDAQ: NFLX  ) , Redbox posted a big dip in comparable sales at its DVD kiosks.

In the video below, Fool contributor Demitrios Kalogeropoulos argues that DVDs may be dying faster than many people expected and that, for better or worse, Outerwall's business is closely tied to the fortunes of that shrinking industry.

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  • Report this Comment On July 30, 2013, at 8:26 PM, AceInMySleeve wrote:

    Anything about their instant service? The silence is deafening. Almost certainly a complete and total fail.

  • Report this Comment On July 30, 2013, at 9:47 PM, Gunnyphillips wrote:

    If this is true [and I don't doubt it is] then it is a shame. Redbox does an excellent job of delivering a particular piece of the entertainment puzzle many of us want. Netflix is obviously focusing on the future with it's streaming and content strategies, and Hulu is pretty much dedicated to TV. When you want a quick and cheap DVD or BD rental there's simply nothing like Redbox. I am a satisfied customer and wish them well.

  • Report this Comment On July 30, 2013, at 9:56 PM, AceInMySleeve wrote:

    I still spend more at Redbox than Netflix. However, my trade on them would probably be selling calls. They are almost certainly in post-mature mode.

    I feel similar about DirecTV, but it might still be an early call for that.

  • Report this Comment On July 31, 2013, at 1:18 AM, sliderw wrote:

    Redbox was great for Coinstar/Outerwall when it grew and grew. Now that Redbox accounts for a huge portion of Outerwall's business and is staring down DVD's dim future, not so much.

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