Forbes reports that Redbox parent company Coinstar “will pay up to $100 million for the 9,000-10,000 kiosks now operated by NCR under the Blockbuster Express name; those will be added to the roughly 35,000 current Redbox locations.
Coinstar CFO Scott Di Valerio notes that the company will own the physical kiosks, but not all of NCR’s retailing relationships, which suggest some locations will be moved or mothballed.”
According to the Forbes story, there could be antitrust objections to the deal, since “Redbox already has 37% of the U.S. video rental market by units; by dollars the total is in the 20%-23% range ... If you thrown in another 10,000 kiosks, the total could soon hit or surpass 50% of the market.”
It will be up to the Department of Justice to decide whether the market should be considered within narrow confines (kiosks only) or as the broader universe of all video rentals, which would include kiosks, mail, and even video streaming.
Coinstar CFO Scott Di Valerio notes that the company will own the physical kiosks, but not all of NCR’s retailing relationships, which suggest some locations will be moved or mothballed.”
According to the Forbes story, there could be antitrust objections to the deal, since “Redbox already has 37% of the U.S. video rental market by units; by dollars the total is in the 20%-23% range ... If you thrown in another 10,000 kiosks, the total could soon hit or surpass 50% of the market.”
It will be up to the Department of Justice to decide whether the market should be considered within narrow confines (kiosks only) or as the broader universe of all video rentals, which would include kiosks, mail, and even video streaming.
- KC's View:
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Not a lawyer, and don’t even play one on TV, but I think logic suggests that you have to consider this deal in the broadest possible context. Kiosks don’t just compete with other kiosks, but also with Apple’s iTunes, Amazon, Netflix, and all sorts of other downloading and streaming options.
For example...Reuters reports this morning that Amazon.com is about to announce a deal with Viacom that will allow them “to launch a standalone subscription service to compete with Netflix Inc.” The service would go beyond Amazon’s current video streaming business, which is offered as part of its Prime service.
The big story here is that Netflix increasingly is under attack from a number of quarters, and that the entertainment landscape is rapidly changing. This should inform how the DOJ approaches the Redbox/Blockbuster question, but also how every retailer thinks about the world of consumers. Because it is changing consumer needs and desires - even those needs and desires that consumers don’t yet realize they have - that really are driving the shifting marketplace.
