Workplace

Titans of Tomorrow: Coinstar

By Gianni Truzzi December 28, 2012

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This article originally appeared in the January 2013 issue of Seattle Magazine.

Most people likely see Bellevue-based Coinstar Inc. as the parent of the popular Redbox DVD rental business, but thats not how the company sees itself. True, most of its $1.8 billion in annual revenues derive from its 42,000 Redbox kiosks that have challenged Netflix for dominance, but CEO Paul Davis sees it as only the most successful avenue to date for innovations in what he calls automated retailing.

Its a space that Davis views as an underdeveloped platform, a highly profitable cranny between online and bricks-and-mortar commerce that consumers find convenient and retailers like for boosting foot traffic.

In recent years, Coinstar shed many of its lines of self-service kiosks, which included attempts at vending gift cards, e-payments and money transfers. But even as Redbox ramps up a partnership with Verizon for a streaming movie service to rival Netflix, Coinstar is testing new kiosk ventures. In partnership with (Starbucks-owned) Seattles Best Coffee, Rubi machines dispense brewed coffee drinks. Redbox Tickets, now testing in Philadelphia, takes on Ticketmaster by vending tickets to concerts and sporting events for a $1 service charge.

Davis views the company as an innovation center, recognizing that experiments often fail. But it has tinkered with its development process as well, generating ideas from within, pre-testing with consumers and incentivizing expert teams with rewards based on the value they have created at the end of four years. Despite expectations of a high failure rate, a large proportion has earned moves into the larger marketplace.

Among them are Orango, which sells discounted refurbished electronics, and Alula, which buys back unused gift cards to aggregate and resell. Partnerships include EcoATM, a San Diego-based venture that lets customers turn in old cell phones for cash. Of course, the companys original coin-counting kiosks continue to be a core profit center.

Not a lot of people are innovating in that space, says Davis. We are unique in that regard, and we have the opportunity to take good ideas and make them great.

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