[pyre]

I don't work for Redbox so I don't know for sure, but I'm speculating that they maybe using the Krispy Kreme model (i.e. their growth is based on expansion). In other words, since they keep opening up new kiosks they can move product that is not selling well in one kiosk to another new kiosk, rather than it being a sunk cost if they buy product for an area and it doesn't end up selling well. At some point, they may end up collapsing in on themselves if they are not able to raise their prices to account for such write-offs (as their expansion slows). Though my theories could just be hot air since I neither work for them nor am I an MBA (or an economics major at that).

I know that they are looking to raise prices: http://www.insideredbox.com/redbox-begins-testing-higher-ren...

Blockbuster is trying to compete with kiosks too: http://paidcontent.org/article/419-blockbuster-adds-dvd-vend...