Analyst: Windows, Box Office Have Little Impact on Redbox

2 Apr, 2012 By: Erik Gruenwedel and Chris Tribbey

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A new release’s box office tally and retail street date appears to have little effect on its popularity among Redbox consumers, an analyst said.

Following analysis of first quarter (ended March 31) rental data on new releases and their corresponding box office tallies, B. Riley & Co. analyst Eric Wold determined there was an average correlation of less than 15% between the data points. In addition, Wold found minimal difference in rental patterns for titles released on street date and titles embargoed 28 days.

It should be noted that Wold covers Redbox parent Coinstar and is bullish on physical disc distribution via kiosk. Indeed, the analyst has questioned the need for the kiosk vendor to partner with Verizon for a yet undefined digital distribution platform.

Specifically, Wold cited recent releases The Rum Diary and Drive (FilmDistrict), which generated relatively poor box office returns despite starring Johnny Depp and Ryan Gosling, respectively. Diary generated $13 million at the box office while Drive generated $35 million.

Yet, both titles occupied a top spot in the top three weekly Redbox rentals for four consecutive weeks. At the same time, box office hits The Twilight Saga: Breaking Dawn — Part 1 (Summit/Lionsgate) and Puss in Boots (DreamWorks Animation), also ranked among the top Redbox rentals.

Drive has generated $7.4 million in disc sales through March 18 since its Jan. 31 retail release, according to The-Numbers.com. Breaking Dawn — Part 1 and Puss in Boots have tallied $87 million and $37 million, respectively, in DVD sales since their releases.

Meanwhile, Wold found little impact on 28-day delays imposed on A Very Harold & Kumar 3D Christmas, J. Edgar or Happy Feet Two (Warner Home Video) — the latter appearing in kiosks just seven days after street date and ranking No. 5 among the most rented titles through the week ending April 1.

Warner, of course, was the first studio to implement a 28-day embargo on new releases into the rental channel. It now has a 56-day delay on new releases to Netflix — a move the studio is considering expanding throughout all rental distribution as it champions sellthrough-based digital locker UltraViolet.

Happy Feet has sold more than $13.4 million in DVDs, while J. Edgar has sold $7.7 million and Harold & Kumar $5.4 million, according to The-Numbers.com.

“We actually believe we saw some interesting evidence of Redbox’s ability to get enough Warner Bros. titles into the kiosks using the workaround program,” Wold wrote in an April 2 note. “Given that Redbox’s average revenue per kiosk increased by 17% during Q4 with only a partial benefit of the 20% price increase taken during that quarter, we actually see the potential for upside to our assumptions.”
 

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