Congratulations, Redbox! You're now as cheap as your $1 nightly rentals.
As long as consumers don't mind, it won't be a problem. For now, Netflix hasn't received a whole lot of backlash for its deal. Netflix subscribers have had to wait an extra four weeks for The Invention of Lying and The Time Traveler's Wife, but it's not as if these were blockbusters. The real test of patience will come next month.
Time Warner is releasing The Blind Side on March 23, two weeks after the Academy Awards. It may be a long four weeks for Netflix and Coinstar, especially because potential renters will realize that the movie is readily available through Blockbuster
Netflix has argued that its service is not fueled by new releases. Coinstar can't make that claim, given the limited number of discs its machines can stock. Members of both services are about to feel like second-class citizens in the rental market, and it may not be pretty.
Coinstar was trading legal volleys with Time Warner, News Corp.'s
In short, Redbox kiosks will begin feeling a lot less relevant, especially as Coinstar strikes similar deals with the remaining studios. As studios advertise their new releases in pursuit of DVD sales and high-margin video-on-demand views, Netflix and Redbox will become more and more exposed.
This is going to be a real problem, for Coinstar in particular. At least Netflix can point to its data-crunching recommendations engine or its growing streaming service. Coinstar simply will not have the Time Warner flicks -- until a large group of movie fans have already bought a copy.
Obviously, this opens the door for a Redbox -- or perhaps even Netflix -- clone that stocks fresh releases.
Coinstar settled, all right -- it settled for less.
Is Coinstar doing the right thing by teaming up with Time Warner? Share your thoughts in the comments box below.
Longtime Fool contributor Rick Munarriz is surprised that the Winn-Dixie supermarket chain is the only retailer with Redbox kiosks in his hometown of Miami. He owns shares in Netflix. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
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