Coinstar

Mississippi Valley State University

Strategic Management

BA 655

A Case Study: Coinstar: A Sleeping Giant Awakens

Submitted to: Dr. Jimmie Warren

Submitted by: Carla Williams

April 2, 2013

I. Strategy Profile and Case Analysis purpose

Coinstar was founded in 1991 and began as a simple coin-counting machine business in the San Francisco area with only four machines. These machines proved to be quite successful and the company went public in 1997, thus expanding to a company of over 10,000 machines by 2002. Due to the success of the coin counting machines, Coinstar began to expand and invest in other ventures, including a money transfer business, an entertainment business consisting of gumball machines and crane games, and Redbox. These new ventures had a limited success and Coinstar began to devote its resources to its two primary businesses, Redbox and Coinstar.

Redbox, which had its inception in 2002, was created by McDonalds as a way to generate revenue. McDonalds and Coinstar entered into a joint venture and by 2009, Coinstar had acquired all shares in Redbox. By 2011, Redbox increased the number of kiosks to 31,000 and began to make plans to offer a video streaming subscription service.

II. Situation Analysis

a. General Environmental Analysis

Coinstar began as a coin counting kiosk service and expanded to a number of different services before acquiring Redbox and divesting its other companies to focus only on the Coinstar Kiosks and Redbox DVD rental kiosk. The geographical distribution and environmental factors played a key role in the decision on where to set up the DVD and coin counting kiosks. The focus of the placement of the kiosks centered around exposure and easy accessibility. In an effort to target its sole remaining brick and mortar competitor, Blockbuster, Redbox placed its kiosks within a five minute drive of every Blockbuster location.

b. Industry Analysis

The DVD rental business remains a...