Coinstar Enters DVD Vending Market

BELLEVUE, Wash. -- Coinstar, Inc. yesterday formed an agreement with McDonald's Corp., to invest in Redbox Automated Retail, LLC., a renter of DVDs through self-service kiosks, with about 800 locations including McDonald's restaurants and major supermarkets.

Coinstar will invest $20 million in cash and will own a 47.3 percent share in Redbox, which has been in operation since 2002 and currently is a majority-owned subsidiary of McDonald's Ventures, LLC.

Redbox is capitalizing on the growth of the home video market that is expected to reach $42 billion by 2014, and the DVD self-service kiosk market segment with growth potential in excess of $3 billion by 2009.

More than three million DVDs have been rented over the last five months at current U.S. Redbox service locations. "Redbox is a proven product that has already gained consumer and retailer acceptance in the United States," said Peter Rowan, v.p. of new business innovation at Coinstar, Inc. "Redbox is a great addition to our 4th Wall product portfolio that helps retailers increase traffic and profit at the front of their stores."

Coinstar, Inc. will now serve as the exclusive sales agent for Redbox in the U.S. for supermarkets, mass merchandisers, drug stores and wholesale clubs.

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