Will customers stick with Redbox in the longer term? Certainly, there are some people who don't have cable or Internet-connected TVs. Redbox DVDs can be watched multiple times if consumers decide to hang onto them. And DVDs have other benefits, like being shared easily with friends.
But digital competition is only getting tougher. The most precise replacement for new releases on Redbox are on-demand rentals and purchases, which are available in roughly the same time window a few months after theatrical release.
Read MoreDon't want to chase Netflix stock? Go see Starz
Digital purchases, which are more expensive, are sometimes even available slightly sooner. Studios love digital purchases because the margins are extremely high—even better than DVD sales. While the absolute numbers remain low, digital sales appear to have traction. In the first nine months of 2014, electronic sales of movies and TV shows rose 33 percent, according to The Digital Entertainment Group, which reports figures collected from studios.
Among the Internet players, competition will likely remain fierce. While Apple has been in the game for a long time, others have come in aggressively. Anthony DiClemente, an analyst with Nomura, points out that Amazon's movie catalog is as deep as any Internet rival. The e-commerce giant is known for keeping prices as low as possible so it's hard to imagine a significant hike anytime soon.
For movie lovers who can wait a bit longer, there are even more alternatives. The likes of HBO and Starz get movies from major studios about six months after DVD release. HBO also plans to launch a standalone service in 2015 and Starz has signaled similar plans. CBS's Showtime may also launch a similar service next year, though it focuses more on original series than new films.
Even Netflix, which tends to focus on older movies, has some relatively new releases from Viacom's Paramount, MGM, and Lionsgate through a deal with premium TV network Epix. It will also pick up Disney titles for theatrical titles beginning sometime in 2016. Disney titles currently go to Starz.
Outerwall has become a serious battleground stock. Some 35 percent of the company's shares outstanding are sold short by investors betting against it, according to FactSet. At the same time, Outerwall is buying back shares aggressively. In the third quarter, for instance, the company spent $71 million on share repurchases. During the period, it generated $30 million in free cash flow.
While Outerwall has likely bought itself some time with a smart price increase, its longer-term problems show no sign of fading.
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