As the icy waters of retail death engulf Movie Gallery/Hollywood Video, Merriman Curhan Ford analyst and frequent Redbox commenter Eric Wold says that the kiosk renter should see a major revenue boost. Wold believes that former Movie Gallery and Hollywood Video customers will gravitate towards Redbox and Netflix as more and more retail locations are closed.
According to Wold, “the departure of Gallery/Hollywood leaves .
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4 billion in incremental home entertainment revenue, including $750 million in DVD/Blu-ray Disc rental up for grabs, based on the company’s 2009 revenue.” Based on those figures, Wold then factored in the average Redbox rental transaction and came up with the following:
“Assuming that Redbox gains 20% to 30% of those [159 million rental] transactions … we estimate Redbox could see an incremental … $31 million to $59 million in gross profits over the forward 12-month period,”
Wold is sometimes regarded as a bit of a Redbox fanboy—how do you think his figures add up? Will Redbox really see such a boost from the demise of Movie Gallery?
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Where will Blockbuster and Netflix’s piece of the pie factor in?
(via Home Media Magazine)
What about VoD?
Certainly Cable/Satellite/IP and all the other streaming players contributed to B&M’s “engulfing icy waters of retail death”, so collectively all should gain along with mail-order and kiosk vendors.
I’d have to agree that all other rental outlets (VOD, Mail-order, and Kiosks) will see an increase in business from their demise. What should be pointed out is the greedy movie studios had a part in the fall of B&Ms as well.
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I bet most of the people that used Hollywood video had already changed to Redbox, and that’s why Hollywood went under. So Redbox already has those sales, no big increase.
“Gallery/Hollywood leaves $1.4 billion in incremental home entertainment revenue, including $750 million in DVD/Blu-ray Disc rental up for grabs”
If they had that market they wouldn’t be closing their doors. It should say:
“Gallery/Hollywood closes, it had $0 home entertainment revenue, customers took business elsewhere”
Are there any qualifications to being a “Merriman Curhan Ford analyst” ?
It has zero revenue the week after it closes. The week, month and year before it had plenty of spending customers to lose to Redbox, VOD etc.
rebox went in across the street from hollywood video here. within 2 weeks hollywood vide went out of business. coincidence? i think not
You think 2 weeks of competition is going to cause any store to just close up?
Sure, the timing may have been a coincidence due the problems chainwide, but no way does one little redbox cause an entire store to just close, lol.
The proverbial straw that broke the camel’s back.
Movie gallery went out of business because they bought Hollywood video on the credit card and could not pay the debt
If movie gallery did not by them it could still be around. The small mom and pop video stores are the real winners. They are leaving the door open where they could not compete before. If you have to rent to the poor and they don’t have credit or debit cards. Netflix, or redbox will not work for them. There are towns of 40000 people with out a video store.
Just a correction, a credit card (per se) is not required at Redbox. It just has to have the (VISA/MC) logo. I receive child support which is placed on one of these cards. Someone is making a lot of money with these cards; but that’s another story. So, any “money” card is usable, so long as it has the logo. “Credit” cards have created the debt we’re in collectively; that and loans. Pay cash!!! Down with Credit! They’re called “debit” cards now, or they should be. Sorry to ramble, but I have been blown away from research on financial institutions and how they operate. I apologize for getting off topic. Redbox is awesome! I just used their first promo code today. Cool. I am curious to their sales numbers, as well as rental; since they do sell (DVD’s). The promos could be a taste test for buyers. I’ve asked about getting a kiosk for the local gas station. They also said credit cards are required. Just misinformed. I just had to add that clarification on the credit cards. Thanks for letting me vent:)
Yes, Mr.Wold, Redbox’s mouthpiece in the investing world.
I also love Shrek movies, very good animation film.