While Coinstar CEO Paul Davis declined to reveal Redbox’s streaming partner in its upcoming venture during his recent Q3 financials commentary, he did report that the company was in discussions with multiple parties.
The Street has run an interesting article discussing five potential Redbox streaming partners, with commentary from Wedbush Morgan analyst Michael Pachter. The list, along with Pachter’s opinion on each candidate, is after the jump.
Netflix
“While we think an acquisition of Coinstar by Netflix would immediately reduce Netflix’s exposure to postage, we don’t see the partnership in the cards,”
Apple
“We see a partnership with Apple as being immensely beneficial to Coinstar, but see a partnership with Coinstar as in conflict with Apple’s core business of selling hardware,”
Walmart
“We think that Wal-Mart would gain more from a partnership than would Coinstar, as the Vudu content offering is not as deep as any of the others on the list, and we are not certain that Wal-Mart has keen interest in competing head-to-head with Netflix,”
Sonic Solutions
“[Sonic] doesn’t have a particularly strong brand, nor a large consumer base . . . We would view a partnership with Sonic as a non-event, and do not believe it would further Coinstar’s stated goals.
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Amazon
“We think a partnership with Coinstar would be mutually beneficial, as it would allow Amazon to leverage its large customer base and to compete head-to-head with Netflix,”
What say you, Insiders? Is Pachter right in agreeing with Eric Wold that Amazon makes the most sense as a streaming partner for Redbox?
(via The Street)
Some possibilities: Amazon, Wal-mart, Comcast, Direct TV, Ron Burkle, Gamestop.
Amazon would know the value of physical assets in promoting digital better than the others listed. Seattle neighbors and amazon would appreciate logistical difficulties of kiosk network. JV avoids tax issues for amazon.
Wal-mart needs a brand to have a chance in the digital biz. Vudu goes nowhere fast without help from a better brand. Redbox is that brand.
Traditional VOD players probably too stuck in their ways to change but perhaps they see the need to evolve with internet VOD players crashing the gates.
Why mess around with Barnes and Noble? Ron Burkle can buy a big stake in coinstar and actually make some money without needing to rattle the cage. Much better than the super market business.
Dark horse 1 in a hundred….gamestop makes a hostile bid. Brings vid distribution leadership back to Dallas, Texas.
Since Amazon is a warehouse, why would they take on MORE physical assets that they have to insure? I mean those kiosk are liabilities as well. Amazon is a global company; how would avaoiding taxes in Seattle benfit them? I mean Amazon has the Kindle and other electronics, plus they sell anything that you could search for. What about taxes for those items? Do you believe that the kiosk would be how some customers get their digital content? Amazon is already digital, I can not logically see how Amazon benefits. Since Netflix is trying to move away from the physical side of renting and has the most contracts with streaming partners; this makes no sense. Redbox does not seem to have a good record with movie studios. Redbox seems to have no TV shows, international or old films in its catalog. Amazon already offers new releases every Tuesday for VOD. Amazon has a lot of new TV shows availabloe for streaming; they could easily offer plans.
I have seen you post on here often and I wonder if you are either an accountant or an analyst? You seem to always argue the merits of coinstar, yet I am not sure if you really grasp their figures. They turn a profit but when you factor in liquidity, liabilities, assets, expenses; they are only doing average, the same way that Apple really is not $50 Billion in the black. If you are an accountant you would know they may be in GAAP guidelines but not completely accurate. I also gather that you assume that REDBOX=COINSTAR, coinstar does have other entities that factor in loss and gains. Gaining any partner is a win-win for Redbox but I seriously doubt that partnering with Redbox would allow Amazon to compete with Netflix.
‘They turn a profit but when you factor in liquidity, liabilities, assets, expenses; they are only doing average’
What in the world do you mean by this? Please quantify.
Rather waste a lot of time addressing your largely incoherent ramble I suggest you focus on this…There are only 2 nationwide physical renting networks. To offer a true hybrid service you have to own or partner with one of these two networks. One is currently unavailable as a partner. That leaves redbox. If you want a true hybrid service then you talk to redbox.
Note – there easily could be no deal but it makes all the sense in the world that folks would want to talk to redbox if they saw value in a hybrid service.
You seem to believe that anyone that does not agree with you make no sense. You spout out numbers yet none of them have anything to do with customers and in most cases are not factual.
I have been doing bookkeeping for years and am on my way to becoming a CPA. Liquidity is if Redbox wanted to cash out; how much they would actually be worth in cash, not assets. The reports businesses release each quarter or at the end of their accounting cycle is both factual and estimated. Companies just have to show they made a profit.
This does not mention anything about a hybrid service. It talks about a streaming partner. Amazon has made no mentions of wanting to get into the renting of physical media; they could have done this years ago. You talked about how the physical assets of redbox would benefit Amazon in promoting their digital offerings. I was question how? In what capacity because taking on more liabilities makes no sense. But you continue to ignore logic while promoting how awesome Redbox is.
I keep reading from REDBOX who THEY want or should partner with but nothing from the other parties. I could buy Walmart and lesser known companies partnering with Redbox because they have something to gain but not Apple or Amazon. I also keeping hearing that Amazon does not want to partner in streaming with anyone. The statement “We think a partnership with Coinstar would be mutually beneficial, as it would allow Amazon to leverage its large customer base and to compete head-to-head with Netflix,” seems to be false. Amazon has been partnering and pushing DVDs with digital copies for a while now. They have been offering a credit to anyone who buys a physical disc to view a VOD. Why would they partner with Redbox? how is it mutually beneficial? Amazon has a large customer base that can be tapped into yes but how would Redbox do that? Amazon could stream themseleves, they can actually rent HBO titles and sometimes offer pre-release smaller films. Amazon has built it empire as an easy-to-find-for-cheap operation….online. I keep reading about the tax issue but people must remeber that Amazon does not only sell media. What about all the other products? Is putting a crap load of money into another company; when they can do it themselves beneficial?
I wonder if Wal-Mart’s competitors would be happy having a Redbox outside their store if they have a partnership with Wal-Mart.
Likely an opportunity for NCR to take away Redbox locations if that one happens.
Again, if we are talking a subscription-based model then Redbox is at a severe disadvantage as a partner since they have easily accessible, physical locations.
JV with walmart on digital delivery that kept the kiosks relevant for longer would seem to be fair game for other redbox partners but perhaps not. NCR makes the worlds worst kiosks and everyone knows this so accounts won’t be happy to go there. I think they could swing it overall. Would be digital players best buy and sears would probably care but the other redbox partners haven’t shown interest in the digital space thus far.
On this we agree. Wal Mart is just a liability to Redbox at this point. It would at best cost them valuable locations and at worst destroy their brand identity. They are doing too well to be forced into oblivion as just another cog.
Maybe I’m not very smart but I think these analysts are smoking something. They’ve once again got it all twisted and backwards. Amazon will not “partner”. They’d buy someone, but not partner. Also having physical entities is bad for them. They’ve been fighting tax laws on both sides of the issue as long as they’ve been around. If they could they’d have only one warehouse on the moon and get out of all taxes.
The best answer is the one the analyst nixed for his very own reason. Sonic Solutions is in need of a partner to make them competitive and Redbox needs a partner to get started. It’s a match made in heaven. Redbox has the name to get people interested all they need is to deliver at this point. They’ll get the press
I think this is a unique situation for amazon so they might consider a JV to get stronger in the space. Another me too VOD service and subscription service probably will not get them to where they want to be. They’ll need to do something different to stand out. A JV would also likely avoid the tax nexus issue. A purchase probably wouldn’t.
Sonic’s vision of the future conflicts with redbox’s biz model. They need to stay neutral and partnering with redbox wouldn’t allow for that.
I don’t see it though. Amazon has the counter model going now. How are they going to justify their pay per view system if they also offer a subscription system.
I see it going this way. Redbox doesn’t “partner” in the sense that the analysts are predicting. I say they partner in the more traditional subordinate route. They’ll either go to Sonic Solutions for tech know how or they’ll go straight to Limelight Inc. and deliver the streams themeselves.
Limelight is a powerful server that used to, maybe still does, host Netflix. Amazon is moving to their own servers and the story was that Netflix would use Amazons as well. That leaves a nice little void at Limelight that Redbox could fill.
All Redbox would have to do then is get the digital rights and a machine to do the decoding. Since they are going (assumed) with a less is more catalog they have less to encode and can easily handle it. In this day and age I’d bet they could get digital encodes directly from the source anyway and skip the entire process. Then it’s just who hosts them and how do you get it to the end user.
I hope the PS3 and the Roku are quick to get the Redbox app.
Forgot about Akami. They are Limelights main competitor right now. They handle, I think, more traditional hosting but at similar levels. They would be a good partner also.
That’s right. All Redbox has to do is pony up several billion dollars for the digital rights to some movies.