Coinstar CFO: Streaming Not a Priority to Redbox Users

15 Sep, 2010 By: Erik Gruenwedel

coinstar

A Coinstar Inc. executive Sept. 15 said customers of its Redbox subsidiary have little interest in downloading or streaming movies from kiosks.

CFO J. Scott Di Valerio, speaking at a Credit Suisse investor event in New York, said consumers at the kiosk vendor’s highest trafficked locations, including Walmart, supermarkets and pharmacies, do not have the interest or wherewithal to carry portable flash drives required to download content.

He said the typical kiosk customer acquires a kiosk movie rental as a secondary activity to other shopping needs, not as a primary objective.

“We have the capability, but our consumers are not really asking for it,” Di Valerio said, adding that Coinstar would elaborate further on its digital initiatives, including a possible Web-based streaming service, during the third-quarter financial call.

Alluding to analyst concerns about pricing, the CFO said Redbox would continue to evaluate the current $1-per-day standard-definition DVD rental rate, including testing higher prices in select locations. Redbox formally bowed Blu-ray Disc rentals during the third week in July at $1.50 per day.

“We are not ready to announce anything at this point,” Di Valerio said.

He said there continues to be “a great deal of white space” in the kiosk market, including anywhere from 45,000 to 60,000 possible kiosk locations through 2013.

Di Valerio reiterated that he believes Redbox has learned how to better manage inventory after the kiosk vendor underperformed in April when Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment implemented 28-day delays on new releases.

A dearth of major box office releases from Redbox’s studio partners, including Sony Pictures Home Entertainment, Paramount Home Entertainment and Lionsgate, resulted in what the CFO called “a strange anomaly” during the second quarter. Redbox found itself with only one theatrical new release and 12 direct-to-video titles during the month.

“Our studios didn’t have the releases, so we had a tough April,” Di Valerio said.

He said the impact of 28-day delay in the quarter was further compounded by the previous year’s success of Paul Blart: Mall Cop, which reached 1 million disc rentals faster than any other title for Redbox.

“I do think we will get better and better as we get through Q3 and Q4,” Di Valerio said.