Netflix, Redbox prove that video rental is alive and well

You can now add Redbox (or more appropriately, its parent company, Coinstar) to the proof that while Blockbuster and other video rental companies are all but dead, video rentals aren’t gone- they’ve just changed.

Netflix, even with a lot of bad publicity after they had to raise their prices, then finally split off their streaming video services from their popular dvd-by-mail services, has faced challenges in the form of rising costs of streaming content (Starz, which gave them a large portion of their total streaming video offerings, did not renew their Netflix contract even when offered several times the amount of their first agreement) and come out on top. Now, you can add Redbox to that list, too.

Shares of Coinstar are up over 11% for the year after an 8% gain on Friday, thanks to earnings reports that indicated that Redbox increased revenue by 1% with the opening of new video rental kiosks. This all comes in a year when Netflix has doubled their stock price in 2013, which is impressive for a company that was being deluged with angry comments on their Facebook page just a year or so ago.

With all this, though, there are still those in the industry who want to stay well beyond arm’s length of the volatile video rental market. Analyst Andy Hargreaves has pointed out that rental nights per kiosk of Redbox kiosks have dropped nearly 20%, which is certainly not encouraging.

Still, Redbox has also started to offer a streaming option like that of Netflix, which allows users to stream videos from popular devices such as the Xbox 360 and also get a few kiosk rentals per month, to boot. It’s an interesting strategy, and we’ll have to see whether that can help them take more market share from Netflix, which is now using original programming like the new “Hemlock Grove” to keep subscribers.