 |
| Dow | Nasdaq | About Us | Disclaimer |  |
RSS Feed |  |
Follow us on Twitter |
|
Featured Advisors |
Sunday January 31, 2010
Coinstar (CSTR): From coins to DVDs
Paul Tracy, editor The StreetAuthority Market Advisor
Coinstar (NASDAA: CSTR) now offering its products and services in more than 90,000 locations in more than 140 countries." "Every time a customer empties a piggy bank into a Coinstar machine, the company collects 8.9% of the amount. And in addition to getting your coins counted, you can rent a movie from this company, transfer money and make an e-payment. 
"The machine also offers customers the option of getting a gift card to retailers such as Lowe's, J.C. Penney, or Eddie Bauer, just to name a few. Or they can opt for an e-certificate. There is no fee for this option. "Its acquisition of Redbox, which provides one-dollar DVD movie rentals through its ubiquitous red kiosks, has the company seeing green. "The segment has proven to be a very smart investment -- so much so, that the name Coinstar is a bit of a misnomer. The DVD segment comprised about 66% of the company's revenue for the nine months ending Sept. 30. "Coinstar expects to see even more growth from Redbox in the future. About 900 new Redbox kiosks are being installed in supermarkets, convenience stores, Wal-Marts, and McDonald's locations each month. There are now more than 22,000 Redbox locations. "Several surveys indicate that the self-service DVD rental service has the potential for more upside growth. Self-service automated kiosks are appealing more to the public than ever before. Interestingly, Redbox reported two million DVD rentals on New Year's Eve, a record for the company. "One area of concern that could impact Redbox's DVD service is litigation. It has filed lawsuits against three studios, claiming restrictions on DVD purchases. Some studios want Redbox to wait up to 30 days after a DVD is released to the public before it can offer it in kiosks. "There's also the matter of other video rental companies pining for their share of the self-service market. Blockbuster, for one, announced its plans to close stores through 2010 and expand its DVD rental kiosk business. "According to studies cited by management, kiosk DVD rentals should grow from 10% of the movie rental market to 16% by 2013. Redbox has already come close to that with a 14.6% market share, according to CEO Paul Davis in Coinstar's most recent earnings conference call. "Coinstar's management is also seeking future growth opportunities through avenues like video game rentals. Reuters reported that negotiations are underway between Redbox and video game developers, which could open up a new revenue stream. That could certainly make coin counting look like chump change." Learn more about this financial newsletter at The StreetAuthority Market Advisor. |
News Flash
|
|
Sitting in his college dorm room, a student stared at his jar of coins, wondering what to do with them; two years later in 1991, Jens Molbak started a company that allowed customers the convenience of pouring their change into a machine and getting dollars in return.