Coinstar’s Redbox Kiosk Revenue Up, Overall Profit Down8 May, 2009 By: Chris Tribbey
Redbox parent Coinstar announced profits of just under $2 million for the first period, down from the $2.7 million it reported during the same period in 2008. The profits came on revenues of $271 million, $154.7 million of that coming from disc revenue, a 156% increase from the same period in 2008. In the first quarter of 2008, Coinstar announced revenues of $60.5 million from its disc services.
This was the first quarter Coinstar reported Redbox revenues as full owner of the kiosk operator. Coinstar bought out former Redbox co-owner McDonald’s in late February.
“Between DVDXpress and Redbox we had 15,400 units installed nationwide as of March 31, 2009, 1,700 more than just three months ago,” said Coinstar CEO Paul Davis, in a conference call with investors. “We remain on track to have between 20,000 and 22,000 kiosks by the end of the year.”
Davis said that consumer demand for Redbox rentals is up, and that the company has three times as many locations as the largest brick-and-mortar chain selling home video and more than six times as many locations as the next biggest kiosk operator.
Rob Enderle, principle analyst with the Enderle Group, said great retail placement of the kiosks has been a boon for Coinstar and Redbox. “The promise they had from the beginning was the ability to deliver deep catalogue in a small space in good locations, and it looks like they’ve had success with that,” he said.
In terms of retailer placement, Davis said Redbox placed 1,700 new kiosks during the three-month period, and has plans for 2,800 more in grocery stores in the next few months.
“We believe that for the foreseeable future both digital delivery and kiosks will grow significantly as both distribution methods provide significant advantages over traditional brick and mortar,” Davis said, adding that Coinstar will “adapt” Redbox technology to changing consumer self-service needs in the future. “As the DVD market changes we are already laying the foundation for what will be the next product lines for Redbox.”