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Coinstar's Stock Looking to Rise After Netflix's Price Change

Yesterday, Netflix (NFLX) announced its new pricing option for its subscription DVD rental service, one that represents a substantial increase. Subscribers to its streaming service will still pay $7.99 a month for unlimited content, but DVD rentals will also cost $7.99 a month, which is a $6 increase from the $2 surcharge streaming content subscribers, had been paying. Customers are furious including this writer who has been a loyal Netflix customer for almost two years now. The price plan change is set to take place in September giving consumers quite some time to explore other options that are out there.

What Company May Benefit From the Latest News

Coinstar Inc (CSTR)

Coinstar’s stock saw a nice $4 increase after Netflix’s announcement of their price increase. The stock was trading at $54 and was up to $59 on July 13th. Analysts are predicting that consumers who are frustrated about the pricing change will drop their subscriptions all together and simply rent from one of Coinstar’s over 27,000 Redbox rental kiosks.

Currently consumers can rent DVD’s from Redbox for $1 per day and Blue-Ray Discs for $1.50. Even the biggest movie buffs have trouble fitting time in their schedules to rent and actually watch 8 DVD’s per month which, is the amount you would be spending if you kept your subscription with Netflix after their pricing plan change. I plan to keep my Netflix streaming service active but will cancel the DVD rental service and, instead look to Redbox to fill my DVD cravings. I know I am not the only one with this mentality and investors are banking on a major sales increase in the next few quarters for CSTR which is sure to make it a hot stock for the months to come.

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