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Redbox: 775 Million Rentals in 2013

6 Feb, 2014 By: Chris Tribbey

Redbox generated $496.4 million in revenue for parent company Outerwall during the fourth quarter of 2013, with 192 million rentals during the last three months of the year, up 2.2% year over year.

Redbox posted an operating income of $111.3 million, an increase of 39.2%, from the fourth quarter of 2012. Net revenue per disc rental was $2.58.

“Our results reflect the value consumers recognize in our core Redbox and Coinstar brands, with Redbox driving over 775 million rentals in 2013 and Coinstar pushing through $300 million in annual revenue for the first time,” said Outerwall CEO J. Scott Di Valerio. “We are managing these strong, profitable, cash-generating businesses for additional profitability and cash flow by optimizing our consumer relationships and kiosk networks.”

During the quarter, Blu-ray Disc represented more than 16% of Redbox revenue, up from 12.4% during the same quarter in 2012. For all of 2013, Blu-ray accounted for 14.2% of rentals, and in 2014, Outerwall wants that up to as much as 17%. White House Down, After Earth, The Heat, This Is the End, Iron Man 3 and World War Z were the top renting Blu-ray titles.

“In 2013 we were pleased with our Blu-ray penetration,” Di Valerio said during a conference call with investors. “We’re taking advantage of the more than 72 million homes that have Blu-ray players.” He added that more than 50% of Redbox renters have a Blu-ray player.

Redbox aims to add a Blu-ray upsell feature to its website reservation feature, as well as its mobile app.

November proved to be an exceptional month for Redbox, thanks to such titles as White House Down and Grown Ups 2, though single-night rentals were up for the year, negatively impacting overall revenue. Redbox did see a decrease (of 1.4%) in single-night rentals for the fourth quarter compared with the third.

Rents per kiosk were up 1.1% year over year and revenue per kiosk was up 2.1%. Redbox currently operates approximately 44,000 Redbox kiosks in 36,400 locations.

Video games accounted for 2.7% of rentals, down from 3% in the fourth quarter of 2012. Video game rentals accounted for 6.1% of Redbox revenue.

By the end of 2013, Redbox had approximately 1,100 kiosks in Canada, with plans for up to 450 more during 2014, with a concentration in Vancouver and Toronto.

Regarding retailers, Redbox revealed that Walmart, Walgreens and Kroger stores accounted for approximately 15.3%, 14.6%, and 100%, respectively, of Redbox’s revenue during 2013.

For Redbox Instant — the hybrid disc-streaming service the company co-owns with Verizon — Di Valerio said the service now has more than 8,000 digital titles.

“2013 was really focused on getting the CE devices on board, and we’ve been able to get more CE devices on board with Redbox Instant than any of our competitors,” Di Valerio said. “We’ve seen positive results with subscriber adds and [consumer] hours viewing, as well as an increase in digital rents.”

Redbox is paid on a per-subscriber, per-month basis when it comes to Redbox Instant. As of the end of 2013, Redbox had invested $52.5 million in cash in the joint venture, and is on the line for a total of $450 million in capital contribution.

Overall, for the fourth quarter, Outerwall posted a profit of $22.7 million, on revenue of $593.7 million, up 5.4% year over year.

In 2014, Outerwall is forecasting revenue of between $2.35 billion and $2.49 billion.


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