Redbox Parent Posts $41.1 Million Q3 Profit5 Nov, 2009 By: Chris Tribbey
Redbox parent Coinstar Nov. 5 reported profit of $41.1 million on revenue of $296 million for the three-month period ended Sept. 30, in large part thanks to a 75% increase in the number of Redbox kiosks year over year, and a 26% jump in per-kiosk revenue, compared to the same three months in 2008.
At the end of the quarter 20,600 Redbox kiosks were deployed, Coinstar reported, and during one Friday-Saturday period during the quarter, 3.2 million DVDs were rented from the machines. DVD revenue for the quarter was $198.1 million.
“Nearly 200 million consumers will be walking by our kiosks every week,” Coinstar CEO Paul Davis told investors in a conference call. “Our customers have consistently told us they want to try before they buy. Conversion to purchase for Redbox consumers is about 10% higher than other rentailers.”
For the full year, Redbox is predicting revenue north of $1.1 billion.
Davis admitted, “We often have difficulty obtaining quantity” when it comes to new-release DVDs from Warner Home Video and 20th Century Fox Home Entertainment, since those two studios began prohibiting their wholesalers from selling to Redbox. “There is some impact, no doubt about it,” he said.
Merriman Curhan Ford reported Nov. 2 that after visiting more than 50 kiosks in 16 different states Oct. 31, it found Fox’s Ice Age: Dawn of the Dinosaurs stocked in only 67% of machines, and completely checked out in 65% of those. Warner’s Orphan was listed as available in 51% of machines, but was completely checked out in 100% of those kiosks.
Davis said it was “always a possibility” that the kiosk company could agree to buy DVDs directly from a retailer, working around the studios’ restrictions.
Regarding the news that Redbox was testing $1.50 and $2 rental price points in select markets, Davis said it will be weeks before the company has any concrete results on how those kiosks perform. “It’s still very early. We’re not only doing tests, we’re doing research, talking to our customers, and our competitors’ customers,” he said.
While he would not discuss Redbox’s ongoing litigation with Universal Studios Home Entertainment, Fox and Warner over those studios’ wholesaler restrictions, he did note that Redbox “simply want[s] to be treated like every other rentailer.”
The company also announced it had appointed James Blanda, a partner with consulting firm Tatum Inc., as interim CFO, effective Nov. 10. Blanda takes over for John Harvey, who has said he is leaving to spend more time with his family.