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Redbox Approaching Market Saturation?

RedBox-LogoIf you live in the U.S., chances are there is a Redbox kiosk not too far from you. While that’s great for convenience’s sake, it may not be good news for the company’s long-term growth prospects.

J.P. Morgan analyst Paul Coster has cut his rating on shares of Redbox parent Coinstar from Underweight to Neutral. Coster believes that Redbox is approaching a saturation point in the DVD rental marketplace, with nearly three-fourths of the U.S. population now within a 10-minute drive of a Redbox kiosk.

Coster thinks that the DVD kiosk market may be peaking as the machines become ubiquitous and streaming viewership continues to grow. Said Coster:

“We think the Redbox business can grow in 2013, owing to further market-share gain from Blockbuster and Netflix, but we think the secular trend is clear, and 2014 is likely to demonstrate that the DVD rental market is entering a decline phase.”

Is Coster right on the money here, or can Redbox continue to grow for the foreseeable future?

[via Forbes]

16 Responses to “Redbox Approaching Market Saturation?”

  1. Member [Join Now]
    ChadCronin [chadcronin]

    I myself want to rent more now. I would choose streaming more if costs keep coming down. I don’t see rentals going up much more than where they are now.

  2. Visitor [Join Now]
    DanoFive0 [visitor]

    I have Netflix online… And Block Buster three out at a time in the mail. All for under $30.00 a month. I cut the cable out 100%. And never looked back..
    I buy a few DVDs and TV shows on DVD.. And doing great. And I can hit RedBox every now and then..

  3. Member [Join Now]
    BlueDesert [bluedesert]

    I live in a small resort town of 40,000 people. Within 2 miles of my house there are 8 Redbox kiosks. I use those for the BIG titles that come out every week. I used Netflix thru the mail for the latest foreign and indie titles.

    The only way for Redbox to up it’s game is to stock titles of older popular movies. There are only a few new releases every week. Redbox wastes 98% of the space in it’s kiosks with C and D list,and straight to video selections.Those titles pretty much SUCK. I might rent THE SHINING,Midnight Cowboy or Easy Rider. I am certainly NOT going to rent Kitty Kittty Flower Flower or Lets Kill Teacher. Redbox should have more respect for it’s customers.

    • Visitor [Join Now]
      DanoFive0 [visitor]

      BlueDesert,

      Well said and very very true!

      Danno!

    • Member [Join Now]
      mlkepner

      which customer – you or the customer who wants a family movie or the customer who likes dimented or horror (i’m guessing that’s what you meant by Lets Kill Teacher).

      My suggestion would be since their nitch seems to be the latest releases – they should fill the box with more of the newer releases. Quite frequently have to go from kiosk to kisok looking for a new movie in stock (my-fault should look online 1st) but to Redbox’s credit their locations do appeal to the impulse buyer.

      just my 2 cents

  4. Visitor [Join Now]
    Win On Quibids [visitor]

    Useful stuff, but the theme do not display properly on my Powerbook…maybe you need to examine that out. Thanks, anyway.

  5. Visitor [Join Now]
    Brandi [visitor]

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