Redbox wants to muscle its way into movie and game renters' hearts. In an industry dominated by Netflix and GameFly, it rents DVD and Blu-ray discs, and video games through its signature red kiosks at major retailers, including Wal-Mart, McDonald's, and Walgreen's drugstores. Customers rent movies at the automated kiosk for $1.20 per night -- $2 for games (with no late fees!), or they can reserve them online and pick them up at the kiosk. Discs can be returned to any Redbox machine and no membership is required. The fast-growing firm boasts some 38,500 kiosks across North America (with each holding some 200 titles). Founded in 2003, Redbox has rented more than 2 billion discs to date. It is owned by Coinstar.
Redbox became a wholly-owned subsidiary of Coinstar in 2009 when Coinstar upped its stake from 51% to 100% of the kiosk operator. Previously, Coinstar had increased its stake in the firm from 47% to 51% in 2008.
Redbox kiosks are becoming ubiquitous, with some 29,300 locations in all 50 US states and Puerto Rico. Thousands of Redbox kiosks can also be found in Canada.
Redbox is its parent company's cash cow and growth engine, contributing more than 80% of its total revenue in 2011. Indeed, Redbox's sales increased nearly 35% in 2011 vs. 2010, while its operating income climbed 74% over the same period. The increase was primarily due to an 18% increase in same-store sales growth at its kiosks, and the addition of more than 5,000 new kiosks in 2011. (Redbox's rental count in 2011 totaled 684 million, up from nearly 369 two years ago.) Also, in the fourth quarter of the year the fast-growing company raised the price on a standard DVD rental to $1.20 from $1.00, citing higher operating expenses, including higher debit card fees.
Key to the company's aggressive growth strategy is the addition of video game rentals to its kiosks nationwide, as it seeks to lure gamers away from rival GameFly. In the second quarter of 2011 Redbox began offering game titles across three platforms: PLAYSTATION 3, Nintendo Wii, and Xbox 360 for a $2 daily rental fee. The firm is also growing by acquiring additional kiosks from other operators, including self-service kiosks and DVD inventory from NCR Corp. in mid-2012. Looking to new modes of distribution, Redbox has formed a joint venture with a Verizon subsidiary to launch in the latter half of 2012 a nationwide video distribution service that will deliver content via broadband networks on video enabled viewing devices. Redbox holds a 35% stake in the new venture.
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