Analyst: Q4 Slate Potentially Problematic for Redbox

4 Sep, 2014 By: Chris Tribbey

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The difficult summer Hollywood has had at the box office could just as easily translate into a troublesome fourth quarter for kiosk operator Redbox, according to one analyst.

While most summer releases still don’t have a DVD and Blu-ray Disc release date, B. Riley & Co. analyst Eric Wold estimates that while there will be approximately 8% more titles released compared with the fourth quarter of 2013, the overall box office take of Q4 disc releases will be down about 7%.

“However, with two of the summer’s best films (Guardians of the Galaxy and Dawn of the Planet of the Apes) likely to have release dates that would push any Redbox benefit into January, we believe the true comparisons for Q4 could potentially be even less attractive,” he added in a note to investors.

That’s especially troublesome considering the past two years have seen a decline in average revenue per kiosk for Redbox, Wold noted, and the company was aggressive with its fourth-quarter outlook during its last earnings call.

“With a difficult Q4 disc release calendar following disappointing theatrical demand for those films this past summer, we now believe it may be difficult to achieve management’s guidance for both increased rentals per kiosk and revenues per kiosk in Q4 — without an increase in promotional activity,” Wold added.

Redbox was already coming off a disappointing second quarter when it announced a $23.7 million drop in operating income, and reported that June was the lowest theatrical box office month in the company’s history (down 83% from June 2013). 

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