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Innovation

DVD rental kiosks take over; Coinstar's stroke of Redbox genius

Coinstar's move to launch Redbox is one of the better examples of business model expansion into an adjacent category. Coinstar has exceeded its goals for DVD rental kiosk installations.
Written by Larry Dignan, Contributor on

Coinstar's move to launch Redbox is one of the better examples of business model expansion into an adjacent category. Coinstar said Thursday that it has exceeded its goals for DVD rental kiosk installations.

Coinstar, which owns the Redbox DVD rental kiosk business, said it has installed 22,210 systems to top its 2009 projection. Coinstar is installing 900 Redbox kiosks a month, or a kiosk every hour.

From a business perspective, Redbox is a hit, but it's also notable how Coinstar leveraged its own strengths into a new category. Coinstar has relationships with a bevy of stores, mostly supermarkets, and has its coin counting machines everywhere. Leveraging that kiosk model and distribution enabled Coinstar to gain market share for Redbox quickly.

The model is simple yet deadly---at least to rivals like Blockbuster, which now is getting kiosk religion and has to cannibalize its own stores. The landscape now looks like this in DVD rentals:

  • Netflix owns the online world.
  • Redbox is upending the physical rental world.
  • Blockbuster is getting hit on both sides of the equation.

The real beneficiary? The kiosk dealers. To that end, NCR said Thursday that it has acquired DVDPlay, a kiosk maker. Terms weren't disclosed. NCR already makes the kiosks for Blockbuster Express.

It's a kiosk world for DVD rentals.

This post was originally published on Smartplanet.com

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