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fingers-crossed_sxc-776014Another day, another new angle in the Redbox vs. Hollywood saga. The latest comes to us from Eric Wold, an analyst with financial services firm Merriman Curhan Ford. Wold is quoted in an article by Home Media magazine discussing his take on the possible outcome of Redbox’s quarrel with several Hollywood studios.

In the article, Wold speculates that if Fox and Warner are successful in having the Redbox lawsuits dismissed, it would represent a “worst case scenario” for the kiosk vendor, and could cause investors to “question the kiosk movie rental operator’s business model and sustainability”. Wold went on to say, however, that he doubts the suits will be thrown out.

Wold also addressed the upcoming cutoff of street date content to Redbox from Warner and Fox:

“Wold said the two studios represented 33.7% and 28.4% of home video rental revenue in 2008 and in the first half of 2009, respectively. He said that would equate from $338 million to $401 million of Redbox’s total revenue ($1.19 billion) estimate for parent Coinstar Inc.’s DVD rental division in fiscal year 2010.”

Regarding Redbox being forced to acquire content from the two studios through retail channels, Wold had the following to say:

“Redbox acquiring Warner and Fox new release titles via retail channels would add between $1 and $2 per unit DVD cost, resulting in a $12 million to $25 million impact to fiscal year 2010 pre-tax earnings estimate of $292 million. . . Redbox has still been able to obtain the Universal DVDs and generate solid mid- to high-teens [pre-tax] margins over [the 2008-2009] period,”

These are some fascinating numbers Wold is using, though his source(s) for them is not mentioned. If they are accurate, buying Fox and Warner discs at retail, while still causing a significant sting, would likely not have the catastrophic impact on Redbox’s bottom line that some have feared (or hoped for).

To summarize: while admitting that anything is possible and Redbox isn’t out of the woods yet, Wold expressed cautious optimism in the company’s short- and  long-term viability and reiterated his firm’s “buy” stance on Coinstar (Redbox’s parent company) stock.

Is he right, Insiders? Will Redbox absorb any and all punishment the studios can dish out and still come out swinging in the end? Get your commenting hats on and let us know what you think.

[via Home Media]

23 Responses to “Analyst Cautiously Optimistic on Redbox’s Chances”

  1. Visitor [Join Now]
    taxman [visitor]
    I work with VBG. To find out why this is important, click here.

    You know what they say when an “expert” tells you to buy a stock without a solid basis of facts or where the “facts” originate from?

    This sounds like an all or nothing “Stock”, you wanna gamble?

  2. Visitor [Join Now]
    Joey [visitor]
    I work for VBG. To find out why this is important, click here.

    If you think it is going to only cost red box $1 – $2 more to get the dvd’s through retail than I have an oil well I’d like to sell you.
    Where to start… Let’s see if red box was getting $5-$7 dollar buy backs averaging $7 paid per DVD – now they are getting $0 buy backs except what people buy out of the machine or forget to return (this might…let’s be generous cover 20% of their disc) + now have to pay $15-20 per disc = the increased cost will be more in the $8-$10 range add to that the cost of getting, repackaging, and stocking the disc I would say unlike Eric Wold…resulting in a $12 million to $25 million impact to fiscal year 2010 pre-tax earnings estimate of $292 million….more like a $150 million dollar hit (being generous). Remember these studios stopping red box from devaluing this industry represent 60% of the titles available.

    • Administrator
      Michael [administrator]

      Alright, Joey… I have defended your comments for awhile, but you are wearing a little thin.

      While I don’t know Eric Wold, I do know he is one of the top analysts in the country according to Forbes. With that said, I highly doubt he is pulling his numbers out of thin air – but you are.

      Alas, it appears you are indeed a troll, and I will no longer be responding to your comments that add nothing to the discussion. You are clearly here to spread your FUD as you never say anything different, no matter the evidence mounting against your opinion.

      So, party’s over Joey. I think you are about to be voted off the island…

      • Visitor [Join Now]
        TexasRebel [visitor]

        Joey!!!!

        The Tribe has spoken.

      • Visitor [Join Now]
        Joey [visitor]
        I work for VBG. To find out why this is important, click here.

        Is that how it is? I don’t agree with your comments or post so that’s it. As it was said before time will tell as we are comming up on the 4th quarter. With that being said expect me to tell you I TOLD YOU SO!

        • Administrator
          Michael [administrator]

          It has nothing to do with you agreeing/disagreeing. I have been happy to hear your thoughts in that regard. But lately, you have been bringing nothing the the conversation. You keep repeating the same things like you have “talking points” to cover that you must add to every post.

          You need to understand that I don’t have a horse in this race. I report on what is happening – and of course I have an opinion – but the outcome won’t matter to me in any significant way. Can you say the same? Because if not, THAT is the definition of FUD.

          BTW, if you have access to information that is actually concrete and can be backed up by numerous sources, I will even let you write a post on this blog. Bring me some new and valuable news, and I will publish it. This blog is called “Inside Redbox”, not “Good Stuff About Redbox”. I will publish anything that comes from a reliable source. Can you prove to me that you are one?

        • Visitor [Join Now]
          Jody [visitor]

          Does anyone else feel the hate just emanating from this guy? It’s like being around nothing but negative energy. Why so negative all the time? You need to be a little more open minded and LISTEN. I have completely listened to your side in everything and Michaels, and he responds very calmly and maturely and you always seem to be ready to chew someone out. Also, I noticed you keep repeating yourself over and over and over….again. all the same things all the time. If you really want to have a heard opinion on here, you have to start understanding the people and showing some feeling as to why Redbox is so popular. I know you have got to understand the economy right now. Can you blame a guy who happened to just get laid off and is worried about paying the bills not to mention how he is going to feed his family for the week? Then imagine the thought of some kind of entertainment for the family for the night. DING! Redbox. Can you really blame this guy for being economically safe with his entertainment purposes? Have you ever known what this is like? This being said, it is happening all over. That is a good part of the reason Redbox got so popular, once the economy downturned. People do not have the money to spend $20-30 on a DVD right now. It’s just not going to happen. I used to buy DVDS all the time, but since last fall, I have not been able to afford to do that anymore. Then 4 months later, I finally noticed a Redbox in my newly built Meijers. If you want Redbox to start charging $3-5 per rental, people will still rent, yes, but it will cut off many people still. So instead of them renting 5 different movies for $5, the will only rent maybe 2 @ $2-3 a piece. so….it still is going to level out the same, maybe even less. So what next? I need to see some compassion here or else I will not understand you.

      • Visitor [Join Now]
        Joey [visitor]
        I work for VBG. To find out why this is important, click here.

        I do however understand that you would get tired of debating the biggest issue in this industry with someone who actually knows what’s going on and has access to information pertaining to this issue.

        You say I just keep saying the same thing. I disagree as I think I have validated my opinions in many different ways. I do understand though that It’s much easier leading sheep around then having to deal with a wolf.

        You say the evidence is mounting against me well I disagree and I think there is no evidence of anything yet which is why we have these debates, it’s all speculation.

        I’ve heard your opinions and I’ve disagreed. Even with these (concrete) things you’ve posted or this evidence you say is piling up I don’t see it. Maybe I have a wider view of things our a different set of information because we are both obviously on opposite ends of this industry. But in my opinion and with what you’ve posted, that is the true definition of FUD. Let’s see the last two were a blog from the owner of redbox (like he won’t sugar coat it) and this one which Eric Wold is a speculator these are not concrete facts these are this mans opinions. I have investment companies calling me multiple times a week asking me my opinions of this stock and I’ve heard some say invest some say don’t. If your willing to take this mans opinions as gospil that is your choice but to treat them as gospil is naive.

        The truth is you have no numbers that are fact. You can act like I just don’t get it. But you and I both know I do. Once again time will tell.

        A FEW GOOD MEN…….
        “You want me on that wall, you need me on that wall”

  3. Visitor [Join Now]
    Joe Schmuck [visitor]

    Might as well give it up, Joey. You are never going to convince him or anyone else who doesn’t have studio & wholesaler inside connections. It’s all going to come out sooner rather than later. Then you can come on here & gloat.

  4. Visitor [Join Now]
    h0mi [visitor]

    I have a hard time believing that going to retail to stock dvds will only add $1-$2 to their costs. Wouldn’t buying retail mean that’s an awful lot of retail cases that will need disposal or storage?

    • Visitor [Join Now]
      Joey [visitor]
      I work for VBG. To find out why this is important, click here.

      It’s a fantasy. I promise you this that’s why it’s a ball parked # (add $1-$2 to their costs) I’m sure he got this # directly from Red box who is not about to share excact information and scare off investors. None of this takes into account the buybacks they were receiveing, they were getting over $5 per DVD from Ingram and VPD. There is no way they are going to be getting that on the open market trying to unload the amount of previously viewed disc they are going to be stuck with. Add to this that now they are stuck sharing the revenue they were getting all of with the studios they signed agreements with and this prognosticator is way off the mark.

      • Visitor [Join Now]
        rumblefish [visitor]

        You always fascinate me Joey so would you mind answering one question?

        Is your motivation here to sway readers and redbox users away from redbox or is it just more about predicting the outcome? You may have stated your initial motivation a while back but it has been a lot of posts and I wouldnt even know where to start looking.

        This is not an attempt to be controversial…just an honest question.

        • Visitor [Join Now]
          Joey [visitor]
          I work for VBG. To find out why this is important, click here.

          My motivation is to not have the entire video industry destroyed by a company who is using predatory pricing and a broken business model all the while devaluing packaged media. (my opinions)

          • Visitor [Join Now]
            John Small [visitor]

            Well said Joey.

            This is not anti or pro Redbox info that you and I have been spreading. It is simply the facts that Redbox has a broken business model that they are desperately trying to hide.

            I appreciate your posts as they at least have some semblance of thought.

            I totally understand that people want their $1.00 rentals but at the cost of the entire industry? That makes no sense at all.

            As for Michael, maybe he should be trying to look at the real numbers behind Redbox rather than just cheerleading.

          • Visitor [Join Now]
            rumblefish [visitor]

            I just read an article citing BLU RAY rentals growing at a much higher rate…crazy amounts. Perhaps that HUGE increase is factored into this industry-devastating rental increase?? Maybe it should be?

            If so then you can hardly blame redbox. I leave it to you guys to bring the numbers since you seem to have all these incredible sources of information.

  5. Member [Join Now]
    luvbaja

    I’m going to transfer to another monastery, I’m sick of this constant quarelling.

  6. Visitor [Join Now]
    Sean [visitor]

    O.K., Joey is outright name-calling now. A direct insult to everyone on here. I do not appreciate being called a sheep. I do not follow blindly. I have many issues with redbox, they are not perfect. But is is the best place to rent from right now…the only fair place really. I think it is totally ludacris to say that redbox renting by-the-night is going to bring an end to the entire movie industry. Absurd. However these lawsuits turn out for redbox, and it may not be good, movies will continue being made and we will continue watching them.