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Coinstar CFO: Redbox Upping Blu-ray Focus

9 Mar, 2011 By: Erik Gruenwedel

Redbox is increasing attention on how it presents Blu-ray Disc titles in kiosks, in addition to incorporating user-interfaces that enable consumers to view either high-definition or standard-definition rentals, the CFO of parent Coinstar Inc. said.

Speaking March 9 at the Wedbush 2011 Technology, Media & Telecommunications Conference in New York, Scott Di Valerio said Redbox would up Blu-ray kiosk penetration to the high end of previously-announced 5% to 10%, with title selections based on the most popular genres and total market demand.

The CFO said Redbox management had expected Blu-ray to do better in the fourth quarter and, as a result, has taken steps to better understand the format, including determining what new high-definition releases make the best rentals — typically action films.

“What we’re really trying to do is focus on genres that are more rentable from a Blu-ray perspective, and buying at the right [purchase] levels so we can get the levels of turns needed on those discs,” Di Valerio said.

He said the $1.50 daily rental price for Blu-ray remained attractive to consumers while providing superior margins as well.

“We are very bullish on the Blu-ray opportunity and think it is certainly accretive.”

The executive shed little new insight on efforts to roll out a streaming platform with a third-party partner other than to say it would happen this year.

“We are continuing those discussions … and we have said we will launch a service in 2011, and we are on track for that,” Di Valerio said.

The executive said Redbox is adding 5,000 to 6,000 new kiosks in 2011 to an install base of 30,000 units in 26,000 retail locations nationwide at the end of 2010. Di Valerio said 60% of the U.S. population lives within a five-minute drive from a Redbox kiosk.

The executive said Redbox continued to work on product management — an issue the company said undermined fourth-quarter results. DiValerio said “more robust” analysis on disc inventories and product performances continue, while adjusting purchasing more in line with consumer trends.

He said the data would help with title and quantity purchase decisions typically made six to eight weeks before a movie is put into a kiosk.

“We do a post-mortem on every DVD that is in our kiosk to try and determine how it performed,” DiValerio said.

Redbox ended 2010 with a customer base of 31 million active credit cards, 8 million unique monthly visitors to its website, 1.77 million Facebook friends, a 23 million-member e-mail list (Redbox communicates directly with 16 million to 17 million of them weekly), 3.1 million iPhone apps downloaded, a 1.9 million SMS text list, 82% brand awareness and 81% brand advocacy.

“People love the value of it,” Di Valerio said.

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