It looks like Blockbuster is not the only kiosk vendor getting into the digital downloads game. Paul Davis, the CEO of Redbox parent Coinstar, announced yesterday at an investor summit that the kiosk operator is testing a new digital service with CinemaNow.

Through the arrangement, a selected group of Redbox’s most active customers will be able to purchase prepaid rental packages, which will include a digital download, at redbox.com. Says Davis:

“We are testing a partnership to look at digital opportunities where a consumer can come in and prepay on a monthly basis, and they get X number of [packaged media rentals]. . . Then [they get] a digital download [rental] at a discount or free price.”

Davis likes what he sees in the future for digital downloads, and wants to use to the tests to verify that this is a place Redbox should be going:

“We see digital as a space that will continue to grow. . . We think this is a space we should be testing in. We first have to see if there’s interest from our consumer base.
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Eric Wold, an analyst with Merriman Curhan Ford and frequent Redbox commenter, agrees:

“. . . the morphing of the two models could work very well. . . I do not think that all consumers are ready to pay the current cost of a digital download for all of their movie-viewing experiences and the combination of the two price points and rental models could help Redbox straddle both sets of consumers.”

Over to you, Insiders. Would you like a prepaid option with a side of digital download added to your Redbox menu?

[via Home Media Magazine]