Despite renting 1 million DVD movies a day in 2009, and staking nearly 17% market share in the business, Redbox is exploring electronic distribution via SD cards, USB drives, and portable media players, says an analyst.
The day after parent Coinstar Inc. reported a 50% increase in 2009 revenue to $1.1 billion, due largely to rental kiosks, John Kraft, analyst with D.A. Davidson & Co. in Lake Oswego, Ore., said Redbox would not "sit on the sidelines" regarding digital delivery.
"We believe there is, and will be, a broad base of customers for DVDs," Kraft wrote in a note to clients. "Nevertheless ... we believe the company is testing options, including a partnership with another digital vendor."
Indeed, rival NCR Corp., together with MOD Systems, earlier this year bowed digital kiosks capable of delivering DRM-free MP3 music downloads with the option for movies when that market develops.
Blockbuster, which is rolling out Express kiosks with NCR, is also considering digital distribution via SD cards and USB drives, but does not plan to make it a priority, according to Kevin Lewis, SVP of digital entertainment.