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IHS: Redbox Revenue Up Scant 1.2% in 2013

16 Jan, 2014 By: Erik Gruenwedel

With ongoing shrinkage of the video store footprint, by-mail disc rentals and departure of Blockbuster, Redbox has become the default means by which most consumers rent packaged media. But the kiosk vendor's projected revenue increased just 1.2% in 2013, according to new data from IHS Technology.

By comparison, Redbox generated $1.9 billion in revenue in 2012, which was up 26% from 2011. Redbox parent Outerwall reports 2013 financials Feb. 6.

Indeed, U.S. rental spending on packaged media in 2013 slipped 9%, falling to $4.3 billion, down from $4.7 billion in 2012. Mirroring data previously released by DEG: The Digital Entertainment Group, total sales of discs in 2013 fell to $7.5 billion, down 9% from $8.2 billion in 2012. The mature DVD segment suffered a 13.6% decline in revenue in 2013.

Meanwhile, Blu-ray managed a meager 2.6% expansion. While unit sales grew by 4.2% to reach 124 million, rapidly falling prices made for a weak revenue increase, according to IHS. While combined physical sales and rental revenue topped $11.7 billion in 2013, average monthly consumer spending on physical rental and purchasing dropped to $8.95, down from $9.87 in 2012.

Overall, consumers on average spent more on transactional home entertainment, including VOD combined with electronic purchase, rental and subscription streaming via the Internet — with combined revenue reaching $5 billion. Transactional spending increased to $13.94 per month, up from $13.88 in 2012.

Michael Arrington, senior analyst, U.S. video, for IHS, said packaged media’s lifeline remains Blu-ray.

"Unless Blu-ray Disc prices stabilize and box-office performance stays high, as it might with sequels to The Avengers and The Hunger Games on the table, another year of Blu-ray unit growth that is slight at best could yield a downward turn in spending for the format in 2014,” Arrington said in a statement. “While many factors have contributed to the nearly decade-long fall in consumer video disc spending since the market peaked at $21.9 billion in 2004, one long-term issue is consumers’ rising interest in alternative diversions, including streaming digital video, video games, mobile devices, apps and Internet offerings like YouTube.”

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