Some changes underway in the automated retail space: Outerwall, operators of the Coinstar coin-counting kiosks and the Redbox disc and game distribution network, is acquiring ecoATM for $350 million in cash. EcoATM operates its own kiosk network focused on accepting used mobile phones, tablets and MP3 players for cash and has positioned itself, coincidentally, as the “Coinstar for used devices.”
Outerwall, which officially changed its name from Coinstar Inc. today complete with a new stock ticker (OUTR) and ringing today’s opening bell, was already an investor in ecoATM, which had raised $31.4 million in VC financing, plus another $40 million in debt. Because of the 23% stake that Outerwall already owns, that will be deducted from that $350 million pricetag, the company noted today.
EcoATM is also holder of the 2012 Crunchie for best clean tech startup.
The move is a sign of consolidation in the self-service retail space, and also a mark of how Outerwall has much bigger ambitions beyond simply turning your multitudes of pennies into more useful dollar bills — hence, also, the rebranding.
It also underscores how lower-margin companies like these are looking for ways to ramp up into higher value items, while at the same time providing a much-needed service in our highly disposable economy. In the U.S. alone, ecoATM says 175 million new devices are sold each year, but in terms of older models, only 20% of used mobile phones are collected, and another 50% are either stored or simply thrown away.
“With ecoATM, Outerwall will advance its evolution into multiple automated retail businesses and increase our exposure to the growing demand for refurbished products and mobile devices across the globe,” said J. Scott Di Valerio, chief executive officer of Outerwall, in a statement. “As evidenced by our growing investment in ecoATM over the last four years, we are confident that ecoATM’s innovative, environmentally minded business model will continue to resonate with today’s technology savvy consumers.”
Outerwall, for its part, had already been extending well beyond coin machines and simply returning paper money in exchange for coin shrapnel.
In February 2013, the company (still called Coinstar at the time) kicked off a rollout with PayPal to let users credit their PayPal accounts with the change, as well as withdraw money from those accounts ATM-style and also transfer money to others.
It also owns Redbox, the Blu-ray, DVD and video game kiosk network in the U.S. and Canada, which offers a standalone service but also partners with Verizon for Redbox Instant. The company says that to date 2.5 billion discs have passed through the Redbox service.
Lesser known are the Rubi coffee kiosks launched last year.
EcoATM, which will remain headquartered in San Diego, says that going forward it will expand its service to more locations across the U.S. “We are excited to build upon our successful relationship to take the business to the next level,” Tom Tullie, chief executive officer of ecoATM, said in a statement. “We look forward to benefitting from Outerwall’s resources and expertise to accelerate ecoATM’s rollout and bring our innovative solutions to consumers nationwide once the transaction closes.” That transaction is expected to close in Q3 of this year.