Redbox has 35 million unique customers, renting DVDs for a reasonable ransom of a dollar a day through a fleet of 12,000 automated kiosks. They are primarily located in high-traffic areas of penny-pinching clientele like grocery stores, Wal-Mart
Redbox has already been a thorn in the industry's side with its marked-down new releases, so why should Netflix and Blockbuster be on notice now? Well, now that Coinstar owns 100% of the company, it's likely to put more muscle behind the initiative.
There's nothing wrong with a business venture having too many cooks in the kitchen. Sites like Hulu, CareerBuilder, and MovieTickets.com seem to be doing just fine with the hydra-headed ownership. However, now that Coinstar is completely on the hook for Redbox, it's going to make sure that it grows, because Redbox will now have a bigger impact on its fiscal performance. Coinstar will also have to prove that it made the right decision in going for all of Redbox.
Redbox is also a concept built for recessionary times. Instead of blowing $20 for a pair of tickets at the multiplex -- before we dive into the costly concessions -- a buck can provide a night of in-home entertainment. Netflix and Blockbuster have also been faring well lately, in response to the growing ranks of coach-potato hermits, but it would be a shock to see Coinstar not make a more aggressive push now that it calls all of the Redbox shots.
Netflix and Blockbuster have done an admirable job in tackling the digital delivery challenges of tomorrow. Now they’d better make sure that they don't lose sight of an old-school solution, with dreams of growing larger in the rearview mirror.
Some items with immediate availability on your Netflix reading queue:
Longtime Fool contributor Rick Munarriz has been a Netflix subscriber -- and shareholder -- since 2002. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.