Redbox Buys Blockbuster Branded DVD Kiosks for a Cool $100 Million

Paul Lilly

If Paul Revere were around today, he'd have to hop in his Ford Mustang and ride through the streets lined with Blockbuster kiosks yelling, "Redbox is coming! Redbox is coming!" Not that it would matter, because NCR Corporation, which operates the roughly 9,000 existing Blockbuster kiosks, sold them all to Redbox along with "certain retailer contracts and DVD inventory" for up to $100 million.

"We are very pleased to enter into this agreement with NCR," said Scott Di Valerio , chief financial officer of Coinstar, Inc. and interim president of Redbox. "As the global self-service solutions leader, NCR has strong technology, manufacturing and servicing capabilities, and we look forward to leveraging their expertise as Coinstar continues to grow its core automated retail businesses and expands its offerings."

The deal was announced on the same day Coinstar reported 33.2 percent revenue growth for its Redbox subsidiary, which ended 2011 with over $1.8 billion in revenue, sending a strong message that DVDs are not dead. Coinstar expects Redbox's revenue to top $2.2 billion in 2012.

There are currently 35,400 Redbox kiosks scattered around the nation. Coinstar plans to rebrand the acquired Blockbuster kiosks with its Redbox brand, though it's unclear if it will retain all 9,000 machines.

An interesting side-story to all this is Coinstar's recent refusal to agree to Warner Bros.' 56-day rental window for new release titles. Rather than agree to a waiting period that's twice as long as the industry standard 28-day window like Netflix and Blockbuster did, Coinstar let its contract with Warner Bros. expire and promised its customers it would obtain WB movies through other means. By wiping out the competition in the DVD kiosk space, Redbox put itself in an even greater position to negotiate with other studios, and with WB if it decides to open talks back up.

While all this was going on, Redbox inked a deal with Verizon that will have that the two companies launching a streaming service .

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