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Coinstar, Redbox’s parent company, has seen its share prices drop 14% during the last few weeks.
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This decline, according to Merriman Curhan Ford analyst Eric Wold, is due to investor concerns about Redbox’s upcoming Q4 results and its lack of a digital initiative.

Usually bullish on Coinstar, Wold believes that Redbox will partner with a third-party on its digital service, a move which would reduce risk and cost. Says Wold on a potential partnership:

“While this may reduce the incremental long-term profit potential from digital, we are more focused on the reduced upfront risk and capital spend, the faster time-to-market and the potential for structuring it in a way to drive incremental traffic to the Redbox kiosks,”

Regarding Coinstar’s upcoming results for the fourth quarter of 2010, Wold predicts that Redbox’s numbers will come in at the lower end of estimates, at least in part due to the fact that several of the major titles released in Q4 of 2010 were animated. Animated films typically perform more poorly than live-action films in the rental market.

Do Coinstar shareholders have a right to be nervous, Insiders, or will Redbox come through with a solid quarter and compelling digital strategy in the near future?
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(via Home Media Magazine)

3 Responses to “Analyst: Q4 Numbers Fears and Lack of Digital Making Coinstar Investors Nervous”

  1. Visitor [Join Now]
    JBG [visitor]

    I don’t know (and don’t care much) about Coinstar’s shareholders but I do find it quite intriguing how Mr. Wold and people in that business like to use the term “digital” to distinguish a method for delivery of entertainment media that is no more digital than the alternative. Probably because if he were to use a more technically-appropriate term, it would become a little too obvious how the advantages of that method are mostly geared towards hiking profits and much less for consumers’ convenience. Instead of “digital” (as all contemporary) physical media are also digital), how about “heavily intrusive, proprietary, with-a-high-chance-not-to-work-for-you-when-you-need-it-most”? As opposed to “physical, highly-compatible, reliable, if-it-worked-once-it-will-always-work”? Digital media content streaming over the Internet has been around since the 1990’s and it is still nowhere near being standardized or even have widely-adopted technologies. Remember how prolific RealMedia was at one time, when everybody thought it would become at least the de-facto standard? Where is it now? In fact, in that time period the DVD format went from non-existent to an absolute standard, then BluRay came from nowhere and established itself as a standard. While streaming solutions remain highly-proprietary, to a point where there isn’t even a discussion of “war of the formats” (like, for example, BluRay vs HD-DVD). It wasn’t until a couple of years ago when streaming solutions showed up for the first time in mainstream hardware devices (like TVs) but that wasn’t because NetFlix and the like were reliable enough as delivery technologies but rather because embedded computer technologies became ubiquitous and cheap enough so that TVs are now closer to general-purpose computing platforms than the fixed hardware devices of yesteryear. This is not a technological problem or it would have been solved by now. It is in the fact that some aspects of the physical media delivery concept are not acceptable to the business purposes of the content distributors. It is all about initial investment, standardization, market acceptance, as well as small details such as tapping the early-adopters market, and many other things but I’ve had enough, gotta go…

    • Visitor [Join Now]
      firstlawofnature [visitor]

      Agree 100%. The words ‘digital’ and ‘ownership’ are in conflict with each other. I think consumers will eventually figure this out and perhaps counteract the content owners desires by only renting in digital. Content owners desire for more wallet share unlikely to be met imho.

  2. Visitor [Join Now]
    firstlawofnature [visitor]

    On topic…I’m guessing the quarter will be weak.