Continued from page 1

Fears of a mass customer defection have contributed to nearly 20 percent drop in Netflix’s stock price since the company announced its higher prices in July. Curiously, Constair’s shares have fallen by about 18 percent during the same period, even though analysts such as Pachter and Pacific Crest Securities analyst Andy Hargreaves are urging investors to buy the company’s shares to take advantage of the anticipated influx of Netflix customers. (Coinstar got 85 percent, or $726 million, of its revenue from Redbox during the first half of this year.) The sharp drop in Coinstar’s market value is being driven by investors who believe DVD rentals are a dying business, Hargreaves said.

Redbox isn’t predicting how many Netflix subscribers it might be able to attract.

Since Netflix announced its price increase, Redbox’s promotional efforts have been limited to discounts offered through cell phones and free movie vouchers distributed through Facebook, where Redbox is more popular than Netflix these days. Redbox’s Facebook page has nearly 3.6 million “likes” compared with 1.8 for Netflix’s Facebook page, which has attracted more than 81,000 mostly outraged comments about the higher prices.

Unlike Netflix, Redbox isn’t a big advertiser. Redbox’s marketing expenses during the first half of this year totaled $10 million compared with $199 million at Netflix. Redbox “probably should be doing more marketing than they have been,” Hargreaves said.

Blockbuster has been more aggressive in its courtship of Netflix customers. Just two days after the higher prices, Blockbuster started offering Netflix free trials and discount offers.

Cohen is confident Redbox will prove irresistible to bargain hunters looking for a little home entertainment.

“Our business is easy to understand and it’s easy to try, especially if customers are disgruntled with something else,” he said.