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Coinstar CEO: Redbox Windows May Depend on Title

Paul Davis
Paul Davis

By : Chris Tribbey | Posted: 03 Mar 2010

Coinstar CEO Paul Davis said March 3 that in the future, some titles from studios may have a window at Redbox machines, while others won’t, depending on their box office take.

“Some of the studios we’ve had discussions with — and you shouldn’t read into that that it’s Warner— they might want a window on their big theatrical releases, the ones doing over $100 million, yet not have a window on their lower volume releases,” he said, speaking at the Morgan Stanley Technology, Media & Telecom Conference in San Francisco. “You might see a mixture of windows, depending on the studio.”

Redbox agreed Feb. 16 to a 28-day window for new DVD releases from Warner Home Video, ending months of litigation between the two companies. Redbox is still in court with Universal Studios Home Entertainment and 20th Century Fox Home Entertainment over those studios’ attempts to place a window for new release DVDs at the rental kiosks.

The agreement with Warner assured Redbox it will be able to stock 90% of the DVDs the company plans to have in its machines this year, Davis said.

“It stabilized our supply chain in many ways,” he said.

Davis also said that other studios with which Redbox already has agreements might want to follow Warner’s lead.

“Will there be some studios that will want a window? I suspect that’s quite possible,” he said. “Though I think it’s too big a leap to say everyone will move to that. I think time will tell in the next 12 months.”

Davis also said that Redbox is benefiting greatly from the woes of Blockbuster, which reported in February a fourth-quarter 2009 loss of $435 million and announced plans to close an additional 545 stores this year.

He said Redbox has, on average, 3-4 of its 22,400-plus kiosks within a 5-minute drive of every Blockbuster store in the country. With the closure of more video stores, Davis said Redbox could reach anywhere between 40,000 to 60,000 kiosks in the United States. The company is on track to hit 30,000 kiosks this year.

“The wild card depends upon what happens relative to the closure of the brick and mortar stores,” Davis said.

Davis said NCR Corp., which is installing Blockbuster Express-branded kiosks nationwide, could hit its goal of 10,000 kiosks this year.

“There is a lot of business out there to be had, no doubt,” he said.

Davis noted that 20% of Redbox customers “weren’t even in the rental pool to begin with.”

“They simply did not rent,” he said.

Davis added that Redbox research shows the kiosks result in very little cannibalization on the sellthrough DVD market, and that Blu-ray Disc and Blu-ray 3D will present options for pricing higher than $1 a night.

“We’re very careful with big moves on pricing,” he said.

Redbox currently is testing video game rentals at as many as 250 machines, but expansion is being held up as the company works on the rental system, Davis said.


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