Coinstar Case Study

Coinstar is the leader in the automated retail industry. The company's success started with self-service coin counting kiosks in 1991. After several attempts to diversify, Coinstar ended up with two successful business segments. The coin-counting kiosks and Redbox kiosks (DVD) rental have been highly successful ventures for the company. However, Coinstars business model is facing many challenges that will determine the fate of the company in the near future. The company must diversify its revenue stream and find a long term strategic plan.

The Ameerally Consulting Group conducted an analysis for the company's competitive setting, customer qualities, marketing efforts, and supplier relationships for the Redbox and Coinstar segments.

Coinstar's coin counting kiosks are the foundation for the company and steady revenue of income. The coin segment has fewer competitors than the DVD segment and holds five original patents for its coin counting technology. These kiosks offer customers a more convenient way to convert coins into cash for a small processing fee. Also, customers can convert coins into gift cards and avoid the processing fee. The success of Coinstar is influenced by its ability to apply new technologies into the counting of coins. Coinstar coin counting machine has the ability of counting coins at a rate of 600 coins per minute thus improving its efficiency for customers. In comparison, Redbox which is Coinstar's DVD rental business faces many challenges. Redbox experiences seasonality in DVD rentals where revenues are higher during the holidays and summer months. Also, Redbox has more competitors than the coin segment which include Netflix, Vudu, Apple TV, and Amazon.com. Redbox must continue to build strong relationships with movie studios. As a result, Redbox's dependence on these relationships is a major disadvantage for its new rental releases DVD's. Even though Coinstar's recent growth was generated by the Redbox DVD rental kiosk, the company faces a major obstacle. DVD's will soon become a thing of the past due to video streaming applications over the internet. Furthermore, Blockbuster's bankruptcy was an eye opener that the movie rental industry as a whole is declining at a rapid rate.

Success Determinants of Coin Counting and Redbox Kiosks

For the coin business, Coinstar helps people make the most of their coins instead of leaving them just sitting in a jar. The business strategy behind the coin counting machines was to create an easy and convenient method of converting coins into cash or gift cards. The company's investment in R & D and technological advancement, contribute to the 100 patents of which 90 of them are related to the coin segment. Coinstar's continued success as the leader in changing coins into cash needs a diversified strategic plan. The company's future plans should include more machines in more locations, more options for customers, and more rewards for frequent users using the kiosks. In addition, more improvements need to be made to the coin kiosks as well as increasing different channels of marketing.

Redbox which is the DVD segment offers customers low prices with the convenience of renting new releases. Redbox competes in a quickly evolving and highly competitive industry. Its competitive differentiation is convenient, quick and hassle free access to affordable movies. Redbox targets movie watchers who want to be watching a movie anytime for a low price. Redbox has achieved great success for Coinstar; however, continuing success will be a challenge. The DVD rental business in general has been