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Coinstar CEO: Blu-rays Won’t Replace DVDs in Redbox Kiosks

By : Chris Tribbey | Posted: 11 Mar 2010

Blu-ray Discs will be available in a majority of Redbox kiosks by the middle of this year and won’t replace already available DVDs, Coinstar CEO Paul Davis said March 11. He did not say what the rental price would be for high-def discs.

“Granted, we’ll be paying more for the Blu-ray titles, but you should also assume we’ll be charging more,” he said at the Wedbush Securities 8th Annual New York Management Access Conference.

A majority of Redbox kiosks are not currently full, so there’s space to add Blu-ray titles without removing any DVDs currently available, Davis said. He said 15% of current Redbox renters are expected to latch on to the Blu-ray rentals.

The addition of Blu-ray to the kiosks this year has been expected since Warner Home Video and Redbox agreed to a 28-day window for new-release titles from the studio in mid-February. The deal with Warner cut half of the workaround costs associated with stocking titles from studios enforcing windows with distributors, Davis said.

Redbox is still sending employees out to retail stores to buy Universal Studios Home Entertainment and 20th Century Fox Home Entertainment titles on street date, as those two studios continue to prohibit wholesalers from selling to Redbox. Fox wants a 30-day window on its titles, while Universal is looking at 45 days. Redbox is suing both studios over the issue.

“We still believe day and date is the best solution, and if there are windows on product everyone should be treated the same,” Davis said.

A note from investment firm William Blair & Co. said the Warner window — and others like it — could hurt Redbox’s bottom line.

“We believe this 28-day delay will become the standard for rental kiosks,” the note read. “While Redbox will benefit from wider access to, and more copies of, Warner movies, the delay window creates a significant risk for the company because an estimated 60% of its revenue in 2009 (45% of Coinstar’s overall revenue) came from rentals of new releases.”


User comments

Commented by Rob K
Posted on 2010-03-12 15:30:17

It will be interesting to see if the 28 day waiting period at Redbox and Netflix will help increase traffic at fledging retail stores such as Blockbuster, or if consumers will simply choose to wait. For me, if I didn't see it in the theater, I can certainly wait an extra 28 days to rent from Redbox for $1 instead of paying $5 at Blockbuster!


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