Redbox Results Hurt by Weak Release Slate; Company to Test Price Increases31 Jul, 2014 By: Chris Tribbey
A weak release slate for the second quarter hurt Redbox’s results, with the kiosk operator seeing its operating income drop to $83.5 million, compared with $107.2 million in the second quarter of 2013.
Redbox also announced it would test a price increase in several markets for both DVD and Blu-ray Disc, starting in August. Scott Di Valerio, CEO of Redbox parent company Outerwall, said during a conference call with investors the price increase tests would likely last through the end of the year.
"June represented the lowest monthly theatrical box office in Redbox history,” Di Valerio said. “Box office in June was down 83% from June 2013 as only four titles were released during the month. While the release schedule was not compelling for consumers during the quarter, consumer engagement with Redbox remained strong as demonstrated by a significant year-over-year increase in email open rates, email subscribers and Redbox app downloads.”
Redbox revenue in the second quarter was $445.5 million, compared with $478.5 million a year ago, with approximately 169.3 million rentals in the quarter, down 9.3% from a year ago. The box office take of titles released in the second quarter was down 37.5% compared with a year ago. Net revenue per rental was $2.63, up 2.7%.
Overall, parent company Outerwall saw its revenue drop from $553.1 million during the second quarter of 2013 to $549.2 million this year, with profits down more than 53% to $21.8 million. Operating income for the quarter was $47.9 million, down from $76.1 million.
“Coinstar produced solid results in the quarter, with revenue, segment operating income and segment operating margin increasing year-over-year,” Di Valerio said.
The Wolf of Wall Street was the top rental during the second quarter, with Ride Along, Anchorman 2: The Legend Continues and Homefront also performing well.
Blu-ray Disc rentals represented 14.1% of rentals and 16.7% of Redbox revenue, both increasing from 2013. Games represented 1.8% of rentals and 3.8% of Redbox revenue, both down from last year.
There was a net reduction of approximately 250 kiosks in the U.S. during the quarter, with approximately 50 new kiosks installed in Canada.
For Redbox Instant by Verizon, Outerwall reported that it did not make any capital contributions to the service, though the company will invest another $10 million to $11 million during the third quarter. “We’re not pleased with where our subscribers are to date,” Di Valerio said. “We’re continuing to work with Verizon … to grow out the business.”