What will the vending machines of the future look like? What’ll they sell? Perhaps the question should be: What won’t they sell? Coinstar, the company that owns DVD kiosk giant Redbox, is testing out new machines that’ll sell everything from a first-rate cup of coffee to smartphones and video game consoles.
Redbox has had an enormously successful run in recent years. In 2009, for instance, Redbox added one new kiosk per hour and wound up making twice as much in revenues ($774 million) as it did the year before. Today, there are more than 28,000 locations in the U.S., and two-thirds of the population reportedly lives within a five-minute drive of a Redbox.
Signs have surfaced, however, that Redbox can’t simply keep sticking with the simple business model of more and more DVD kiosks and $1-a-day rentals. The trend for consumers to stream content rather than watch physical DVDs will only grow, and the price of video content will only be getting more expensive, no matter how one watches it.
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Last fall, Redbox had to raise prices from $1 to $1.20 per day’s rental. More recently, Redbox announced a joint partnership with Verizon, and sometime in the latter half of 2012, the two will introduce a subscription-based product combining physical DVDs and options to stream and download movies and other programming.
Before launching Redbox, Coinstar focused mostly on coin-counting machines installed at supermarkets and other venues. For the uninitiated, a customer pours coins into the machine and has the option of getting the amount counted in a gift card to businesses like Amazon and the Gap. Or, for a “convenience fee” of nearly 10%, the coins can be counted and exchanged for paper currency—something your bank should do for you for free.
In recent times, reports the New York Times, Coinstar has also been looking into expanding its kiosk systems well beyond the coin-exchange and movie/video content business. In recent months, it has been testing all sorts of new kiosks and vending machines around the country. Around 500 new kiosks will be installed by the end of the year, and they might be selling quality coffee (from Seattle’s Best Coffee), refurbished video games and electronics (iPhones, video game consoles), or other goods that are unexpected in a vending machine.
You might assume that a chain like Starbucks would be worried about the possibility of a vending machine with the ability to sell a first-rate cup of Joe on the cheap—because there’s no need to pay a barista—but Starbucks actually owns Seattle’s Best Coffee and is in on the coffee-kiosk experiment. Another machine created by Coinstar, called the ecoATM, allows consumers to deposit old cell phones and other electronics in exchange for cash. (The “eco” part arises due to the fact that these gadgets are recycled and/or resold, and don’t wind up in a landfill.)
Coinstar’s high-tech vending devices bring to mind Coca-Cola’s funky new “Freestyle” soda dispenser, which has been installed in restaurants and other select locations around the country and allows customers to mix and match 20 different beverages in whatever Mad Scientist fashion they please.
Looking ahead, it’s likely that consumers will encounter more vending machines—and they’ll probably be in more unexpected and unusual places, selling unexpected and unusual things. Not that long ago, after all, the most common way to rent a movie involved visiting a store and interacting with an actual live human being. And the idea of using a vending machine to buy something like a gold bar? That seemed preposterous.
Actually, that still seems pretty preposterous to me. But such vending machines not only exist, their numbers seem to be growing. So has the presence of vending machines selling things like phones and other electronics—particularly in airports. There’s also the vending machine at a Pennsylvania college that recently started dispensing Plan B, the emergency contraception women are supposed to take within 72 hours of having unprotected sex to prevent an unwanted pregnancy.
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It’ll be interesting to see what Coinstar and other businesses try to sell via vending machines during the test stage. Sneakers? Jewelry? A home mortgage? An entire dinner in a pill, like something out of “The Jetsons”? Who knows.
Here’s one thing we can be pretty sure of, though: The spread of vending machines is unlikely to do much in the way of creating jobs.