Redbox, which is owned by Bellevue-based Coinstar, plans to bundle physical disc rentals with an unlimited streaming offer, CEO Mitch Lowe tells analysts.
Saying it wants to become America’s top movie-rental destination, Redbox is working on a subscription streaming service that could put it head to head against dominant player Netflix.
President Mitch Lowe told analysts Wednesday in San Francisco that Redbox is getting closer to finding an online partner to help it compete for a growing number of customers who prefer to watch digital versions of movies and TV shows on Internet-connected devices.
Redbox, which is owned by Bellevue-based Coinstar, plans to bundle physical disc rentals with an unlimited streaming offer, Lowe said in a presentation.
“What we’re looking for is a partner that, yes, has customers, but also more importantly has a lot of quality entertainment rights,” he said.
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Analysts speculate that possible partners include Wal-Mart, which owns online-movie service Vudu and already works with Redbox as an outlet for its dollar-a-day disc-rental machines. Another possibility is Amazon.com, which reportedly has been talking with Hollywood studios about a Netflix-style subscription streaming service.
Redbox began discussing the outlines of a digital strategy nearly a year ago. Lowe said a new streaming service would need to support “what you get” at Redbox’s 30,000 self-service machines. Because a typical Redbox machine holds only about 600 DVDs representing up to 200 titles, a streaming service would enable it to offer a wider array of Hollywood releases, especially older classics, he said.
Separately, Walt Disney Co. raised the price it charges for DVDs sold to Redbox and Netflix to as much as $17.99 for new releases, the Los Angeles Times reported Wednesday.
Coinstar spokeswoman Marci Maule confirmed in an e-mail that Redbox recently signed a new deal with Disney, but she would not disclose financial terms.
Disney’s wholesale price for a new-release DVD drops to $10.79 four weeks after it goes on sale, according to the Los Angeles Times.
Other movie studios have sought to delay supplies of new DVD releases to Redbox and Netflix in the belief that their low prices undercut more profitable disc sales. Redbox agreed last year to wait 28 days before making new DVD releases by 20th Century Fox, Universal and Warner Bros. available for rent.
Also Wednesday, Coinstar said it will buy back $50 million of its common stock from Morgan Stanley. The repurchase is part of a previously approved buyback worth up to $74.5 million.
Shares of Coinstar stock closed down 39 cents, or nearly 1 percent, to $43.30. The stock has traded between $26.43 and $67.56 in the past 52 weeks.
This story includes information from The Associated Press and Bloomberg News.
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