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Issue Date: Vol. 49, No.8, August 2009, Posted On: 8/7/2009

Coinstar May Sell Amusements, Other Business Units

by Staff Reporter
Coinstar, Redbox, Folz bulk vending, Sugarloaf, Rainbow Crane, Paul Davis, Sony Pictures, coin-op amusement business, national vending operations, coin-op news, movie rentals, DVD vending, DVD kiosks, videogame vending, coin-counting, retail vending

BELLEVUE, WA -- Coinstar Inc. is contemplating selling its nationwide Sugarloaf amusement route, which includes the Folz bulk vending and Rainbow Crane operations. The company's money-transfer services and prepaid calling card kiosk business may also be sold. Alternatively, Coinstar may seek operating partners for these businesses.

Coinstar chief executive Paul Davis told the Seattle Times that the Bellevue company's focus will be on expanding installations of its signature self-service coin-counting machines and its DVD rental kiosks, rung by its Redbox Automated Retail division. Redbox machines might also begin renting consumer videogames.

Quarterly financial results for the period ended June 30 showed profits strongly up to $7 million, better than double the profits for the same quarter in 2008. Revenues climbed 43% to $314 million. Coinstar has enjoyed substantial growth since gaining full ownership of the Redbox business earlier this year.

Separately, Redbox has entered into a partnership with Sony Pictures through which Redbox will supply Sony DVDs in its network of more than 17,000 video rental kiosks. The Sony deal is the first known agreement between Redbox and a major studio.

Redbox, a subsidiary of Coinstar, said it would pay Sony approximately $460 million over the term of the five-year agreement. The Sony DVDs are expected to represent approximately 20% of the total inventory licensed and purchased by Redbox for 2009.

Redbox offers movie rentals for $1 a night, a bargain price over competing rental outlets like Blockbuster. Hollywood studios have voiced their concern over rental machines' growing market-share cutting into their profits, since the increasingly larger base of consumers renting from the kiosks might otherwise have purchased the videos.

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