Monday, March 17, 2014

New Ventures: Succeed Quickly Or Get Cut Quickly

New ventures need to show results in a hurry these days. When a new offering doesn't show early signs of succeeding by measuring up to metrics, the plug is more likely to get pulled. That seems to be the situation at Outerwall (formerly known as Coinstar).

Outerwall has three mainstay products that make product use of space in or near large stores or malls:
  • The Coinstar coin-counting machine, a popular feature in many supermarkets coast to coast. 
  • The Redbox DVD/video game rental machine, especially handy for impulse rentals.
  • The EcoATM "automated e-waste recycling machine," which buys old and used digital gadgets from consumers and recycles them responsibly.

Outerwall's mission is "to create a better everyday. We transform empty spaces into exciting retail solutions that make life easier and less complicated for consumers — and more profitable for retailers."

Its New Ventures division was once the launching pad for Star Studio photo kiosks, Rubi coffee kiosks, and Crisp Market food kiosks. In an earlier post, I questioned whether the photo kiosks would succeed at a time when camera phones are everywhere. Now the answer seems to be: no. The three ventures were introduced in mid-2012. By the end of 2013, Outerwall announced it was dropping the photo kiosks, coffee kiosks, and food kiosks in a cost-cutting move that also included cutting jobs.

The company's New Ventures page explains: "Every idea we invest in is put through a rigorous testing process and measured against key criteria. It has to make sense for consumers, retailers and investors. If it doesn’t, it’s out." The kiosk ventures didn't show early signs of meeting preset metrics for success, so they're out.

Meanwhile, what is Redbox's future in an industry that is increasingly embracing streaming for low-cost delivery and convenience? Redbox Instant by Verizon is a venture that provides streaming movies with monthly subscription pricing, and credits earned by renting at the Redbox kiosks. Consumers can choose to pick up a DVD or click to stream, which allows for targeting of multiple consumer segments. Choice seems to be the key, just as choice allows competitor Netflix to satisfy customers who want to stream and customers who want to receive DVDs by mail.

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