Article

Coinstar expanding services to stay in the game

Photo booth, "eBay in a kiosk" among the company's new launches.

February 17, 2011

Coinstar officials are making plans to expand the reach of their most successful asset — redbox. There's been a lot of talk about the DVD rental kiosk company launching a streaming subscription this year to compete with Netflix, and officials confirmed those rumors at an analyst meeting Wednesday.

Redbox president Mitch Lowe, who was formerly vice president of business development at Netflix, said that although the company's footprint has quadrupled in the last two years, it is looking to partner with a company that enjoys access to "quality digital entertainment rights" and a technology platform.

Gregg Kaplan, Coinstar's president, also announced that the company has been trialing several kiosks, including Gizmo, an "eBay-in-a-kiosk" that sells discounted, refurbished electronic devices, and Face Cube, an Internet-connected photo booth. He also said that the company made a recent investment in EcoATM, a San Diego-based company that recycles electronics.

Gizmo

Kaplan said Gizmo sells discounted refurbished electronics, including laptops, game consoles, X-boxes, GPS devices, digital cameras, iPads and iPods.

"There's a significant proportion of consumers in America that have never gone to eBay and will never go to eBay, yet are very interested in buying a consumer electronics device that might be three or four or five months old — may not be right off the assembly line, or may not be just cutting-edge, but they'd get it at a significantly discounted value and that's driving their interest," Kaplan said. "Those kinds of things, where they're offered at significant discounts ... and these are refurbished products which are also guaranteed from a quality perspective, so if you don't like the product, as a consumer, you can return it no questions asked."

Kaplan said Coinstar deployed a few Gizmos before Christmas in grocery stores and was happy with the results. Although the team is still tweaking the concept, Kaplan said it will deploy up to 10 more this year, "to see if we can replicate those same results off the first three and continue to refine the machine. This is an alpha machine, and we'll have to go through several variations before we find the exact right one," he said.

Face Cube

Face Cube kiosks allow customers to take photos against a digital green screen, add custom backdrops, words and logos and then print them. Consumers also can then post the completed images to Facebook. Kaplan said feedback has been great about the four Face Cubes it has deployed in malls so far. Kaplan said Coinstar plans to deploy 10 more in 2011.

"So this is different from a lot of the kiosks that we're doing today in the sense that we're not selling a product or monetizing a product like what we're doing with EcoATM," Kaplan said. "What we're doing is we're selling an entertainment experience. What we want to see is, can we take this and put it into a very scalable channel like the supermarket space, which has, clearly, spacing strength."

Chirp

Kaplan also told investors about Chirp, a kiosk that sells different merchandise, including jewelry and purses, each week in grocery stores.

"Every week is a new product," he said. "It's the new great find of this week that our buyers have gone out and negotiated with the brands that you know and love."

Coinstar has already deployed 15 Chirp kiosks and has plans for 30 to 40 more this year.

"From a consumer experience, (this is) similar to what we talked about with Gizmo, which is, the product is there and you can see those products, the handbags, the purses, the costume jewelry," he said. "Again, all branded stuff that you'd recognize or your spouse would recognize. Interface with the touchscreen, purchase it with a credit card and get it right there in a nice attractive package. That is Chirp."

Coinstar's game plan

Kaplan said the company is casting a wide net in a varieity of markets to find the best ideas on new kiosks.

"So for example, we'll talk to our retailers on a regular basis — Walgreen's, Walmart, Albertsons, et cetera, and ask them — 'What arethe problems that you're seeing in your stores that we can help you solve', or 'What is it the consumers are asking for? Is theresomething that we can do there to help you?'"

Coinstar employees are also giving input via company-sponsoredinternal business plan competitions. Venture capitalists are also weighing in, Kaplan said.

"We want to make sure that anything that they're seeing in the kiosk world, we're seeing it at thesame time," he said.