Coinstar Day of Reckoning
Good writeup on selfservice world on day of reckoning for Coinstar -- “DVD kiosk growth opportunity peaks in 2011 and that kiosk rental starts to decline in 2012.”
Coinstar’s redbox could soon face day of reckoning: Analyst | SelfServiceWorld | Self Service World
A recent analyst report from a large investment house challenges the prospects for Coinstar and its highly successful redbox DVD-rental kiosk unit, and calls into question the business model for the devices.
Equity analysts from J.P. Morgan in late August trimmed their 2011 and 2012 earning-per-share estimates for the Bellevue, Wash.-based Coinstar, predicting that “DVD kiosk growth opportunity peaks in 2011 and that kiosk rental starts to decline in 2012.”
The reason? Competitors of various stripes will increasingly offer streaming video or video on demand (VOD) through either the Internet or another device in the consumer’s home, according to the analysts. This will be so convenient and inexpensive, goes the argument, consumers will stop visiting the neighborhood redbox.
“We believe adoption of online video streaming and downloading services will accelerate dramatically in 2011 … and be promoted by major retailers including Walmart, Best Buy, Sears and Blockbuster,” write the Morgan analysts. As a result, “DVD kiosk revenue opportunity will peak in 2011 owing to loss of share of the home entertainment market to the online video services.”
This finding isn’t new. Bloggers and industry followers seem to believe the wide-scale launch and acceptance of VOD is inevitable. Coinstar itself acknowledges the inevitable with president and COO Gregg Kaplan declaring that his company is preparing its strategy to get in the streaming game. Kaplan has said that his firm may reveal details of that plan during its third quarter earnings call with analysts but until then it is keeping quiet. A Coinstar spokesperson declined to comment.
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Coinstar’s redbox could soon face day of reckoning: Analyst | SelfServiceWorld | Self Service World
Posted by staff at September 9, 2010 03:35 PM