Red-Hot Redbox

Red-Hot Redbox

A Bellevue company’s DVD vending machines hit pay dirt.

You may have thought that Netflix was completely killing off the brick-and-mortar movie-rental business. And it’s true that one well-known chain seems to be tanking. But another just had a blockbuster quarter.

If you’re not a frequent visitor to 7-Eleven or McDonald’s, you might not have encountered Redbox, the movie vending machines owned by Bellevue’s Coinstar. But Coinstar’s stock soared to an all-time high last Friday after the company announced a huge jump in profits. Its revenue from DVD rentals was up 70 percent compared to the first three months of last year. They’ve now captured nearly a quarter of the DVD-rental market, the company said in a conference call with Wall Street.

Who’s renting these movies? Well, the most popular title of 2009 gives a clue. It was Paul Blart: Mall Cop, according to the company. Followed by Sandra Bullock’s The Proposal. (“You know every tinny beat and false note by heart,” said our reviewer, Robert Wilonsky, of that film.) In other words, Redbox doesn’t exactly cater to the cineaste crowd. The vending machines are there at Walgreens for impulse buys, just like the endcap display of M&Ms.

The strategy seems to be working. Redbox charges a buck a night for the rentals. (After 25 days, you’re a proud owner!) And it’s not as if they’re just counting on lazy people losing DVDs in their sofa cushions. The average transaction is only $2.16, which means people are returning movies pretty quickly. Yet the company still managed to collect $260 million in rental revenue in the first three months of this year.

Consuming culture, consuming a Snickers bar—there’s not that much difference, ultimately. And Coinstar is riding that insight to the bank.

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