Is Netflix Killing Redbox?

Netflix shares dipped slightly, but it’s hard to tell if it’s killing rival Redbox, even though Coinstar’s shares plunged. It all went down Friday morning when Coinstar, the parent company of the $1 DVD rental kiosk service, plunged 25% after reporting its fourth quarter sales.

Redbox said its fourth quarter profits were far below forecasts. However, shares of its top rival, Netflix, dipped a bit as well. It doesn’t appear that consumers were suddenly less interested in watching DVDs during the holidays.

In fact, Coinstar CEO Paul Davis said in a statement Thursday that visits to Redbox kiosks in the fourth quarter “remained strong.” It’s just that consumers rented fewer movies — meaning they stopped by but didn’t spot as many titles they wanted to take home. Revenue rose 38% in the fourth quarter, and same-store sales (an important metric for retailers) were up 12.5%, Coinstar said.

Consumers haven’t suddenly come to the conclusion that streaming movies to their TV or computer via Netflix makes more sense than running out to a grocery store to pick up a DVD. “Most people are wondering if Coinstar’s results mean that DVDs are dead and everyone is shifting to streaming,” Eric Wold, an analyst with Merriman Capital, said in a statement. “If that were the case, people wouldn’t be going to kiosks at all.”