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Analyst: Blu-ray to Generate 25% of Redbox Revenue by 2011

8 Nov, 2010 By: Erik Gruenwedel

With Redbox (and Blockbuster Express) charging a 50% premium on the daily rental rate of Blu-ray Disc content, the high-definition packaged media format is projected to generate 25% of the No.1 kiosk vendor’s revenue by the end of 2011, an analyst said.

Indeed, consumer purchases of Blu-ray content topped $1 billion by Sept. 30, an 80% increase from the first three quarters of 2009, according to DEG: The Digital Entertainment Group.

Michael Pachter, with Wedbush Securities in Los Angeles, said the $1.50 daily rate kiosks Redbox and others charge for Blu-ray rentals, compared with $1 for DVD, coupled with higher rates for video game rentals, account for the revenue surge.

He expects Blu-ray player household penetration to reach 30% by the end of 2011, up 10% from this year. Redbox, in a recent financial call, said it expects to Blu-ray to represent from 5% to 10% of total disc rentals by the end of the year.

“We believe Redbox will see some comp and earnings growth … in the back half of 2010, especially as it sees higher gross profit dollars from the higher priced dollars paid for Blu-ray and video game rentals,” Pachter wrote in a recent note.

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