Coinstar (ticker: CSTR) is fast-becoming an emerging momentum play. The company is approaching a $1 billion enterprise due to their red hot Redbox located at the front of every grocery store all over the country.
Redbox dishes out DVD rentals for only a $1 with plenty of feature titles licensed from Paramount Home Entertainment, a division of Viacom (see: http://www.hauteliving.com/blog/viacom-kicks-off-the-new-decade-with-viable-strength/). Gary Cohen, SVP of Redbox, said, “From road warriors to moms on the run, the iPhone app from Redbox helps customers rent and reserve at any of the thousands of neighborhood locations nationwide.”
Recently, the iPhone app from Redbox surpassed 1 million downloads. Keep a close eye on Coinstar as they steal more business from Blockbuster.
Meanwhile, Netflix (ticker: NFLX) has a market cap over 3 times that of Coinstar. Founder and CEO Reed Hastings possesses the key leadership quality of adaptability — a quality he must have learned while serving in the Peace Corps in his younger days.
His company’s stock has doubled over the past year and grown to serve over 12 million subscribers. Analysts forecast Netflix to double their subscriber base by 2016. A key catalyst is their continuing investment in streaming online movies, ultimately the customer’s next destination for viewership.
On the flip side, Blockbuster (ticker: BBI) was just too late to the online game. The company is now a penny stock! Blockbuster is like an old-fashioned travel agency in the early 90s that didn’t see the Internet boom coming. Eventually, the old-fashioned, traditional travel agencies were run over by online travel agencies like Expedia, Orbitz and Yahoo! Travel. Lesson learned by Blockbuster: adapt to change, otherwise get left behind.
Lastly, keep your eye on TiVo (ticker: TIVO). This week, TiVo announced they are ready to release new DVRs this spring. Unlike the current models, critics are calling the new device a solution to integrating TV and Internet content.
The TiVo Premiere is the answer to the company’s urgency to spark the growth of its stagnant 1.5 million customer base. Price could be an issue, as the new DVRs will range from $299-$499 in addition to required subscription fees ranging from $12.95 a month to $299 for three years.
TiVo CEO Tom Rogers said, “We’re moving toward get anything you want whenever you want it.” A search for Penelope Cruz on the new TiVo DVRs would bring up her movies that are showing soon on TV, available for rental or purchase through Amazon.com (ticker: AMZN), as well as related YouTube videos. Sounds like a convenient one-stop shop library for those willing to pay.
Furthermore, TiVo just won an intellectual property case worth $300 million against EchoStar Communications Corp. (ticker: SATS) the parent company of Dish Network Corp. (ticker: DISH). The win means companies like Comcast Corp. (ticker: CMCSA) and DirecTV (ticker: DTV) must enter into commercial arrangements with TiVo which will yield future licensing fees.
Three new pioneering options are unfolding before our eyes. Which one will you integrate into your experience? Your answer may lead to a great investment.
Disclosure: No positions in the companies mentioned.