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Redbox’s near-ubiquitous rental kiosks more than pay for themselves within the first few 24-36 months of deployment, according to Coinstar CEO Paul Davis. During remarks at the recent Jefferies & Co. Global Internet, Media & Telecom Conference, Davis said that Redbox kiosks typically cost about $15,000 to deploy, and usually earn roughly $50,000 within 90 days in the 3rd year of operation. [admin edit: note corrections made above]

Davis also repeated an earlier estimate that the American market could accommodate up to 60,000 DVD kiosks, which is more than double the number of Redboxes currently in operation. Said Davis:

“To date we’ve never retired a machine . . . We really have the capacity to do 1,000 kiosks a month. That’s not to say we will.”

Is 60,000 the magic number for Redbox? Should Davis adjust his thinking lower or higher? How big of a dent could NCR’s Blockbuster Express boxes put in Redbox’s ambitions?

(via Home Media Magazine)

13 Responses to “Coinstar CEO: Redboxes Quickly Pay for Themselves [updated]”

  1. Visitor [Join Now]
    MA [visitor]

    Didn’t they say that redboxes will have blu-rays by the middle of this year? I have yet to see that. Anyone heard anything about that?

  2. Visitor [Join Now]
    insider [visitor]

    Shane, please stop taking articles from Home Media Magazine and just adding comments.

    I think the original article is misquoted. The machines generate $50000 in the first 3 years not 3 months. Paul Davis has said this during Coinstar quarterly reviews and during that time they pay for the $15000 deployed cost.

    Still pretty good. And without Mg and Hollywood 60000 is a possibility.

    • Visitor [Join Now]
      Firstlawofnature [visitor]

      They said the following about kiosks…year one revenue of $30,000, year two $40,000 and year three $50,000. Payback between 2 and 3 years.

    • Visitor [Join Now]
      Joe Schmuck [visitor]

      $50,000 within 90 days of deployment. LMFAO !!!!! That’s 555 rentals per day, per machine.

      • Visitor [Join Now]
        rb [visitor]

        Yeah, $50,000 within 90 days!!! I better start buying some shares RIGHT NOW!!! …..or maybe, this was just a typo :-(

  3. Visitor [Join Now]
    John Small [visitor]

    He is right as long as they don’t account for any of the extraneous costs of running the machines.

    Sounds like Coinstar may have taken a lesson from a company that used to rhyme with Glenron in their accounting practices.

  4. Administrator
    Michael [administrator]

    Post has been updated with correct information, straight from Coinstar. Sorry for any confusion.

  5. Visitor [Join Now]
    rb [visitor]

    The updated/correct information makes more sense now :-) Usually takes several years as it is for any business to start to turn a profit, so info based on 3 years of a kiosk operation is reasonable…

  6. Visitor [Join Now]
    dkin [visitor]

    So…is there anyway for ME to buy one and reap the benefits?

  7. Visitor [Join Now]
    00kyle [visitor]

    I wonder why $15,000.
    The hardware cant be more than $2,000. The software cant be more than $1,000-3,000 (especially judging by its performance). ISP and power cant be more than $500-1,000. Is the balance ($9,000) of that franchise fees?

    Maybe I am not throwing enough in for the canopy some of the outdoor install have. $15,000 just seems really steep, IMHO.

    Maybe $15,000 is wost case where the kiosk is installed in the middle of the nowhere where power and ISP need to be run from a considerable distance and a new structure is needed.

    • Administrator
      Michael [administrator]

      I think you are grossly underestimating the cost of the hardware. $2000, really?

      I can’t imagine the actual production cost of the kiosk to be less than $9,000, and it may be even more than that. It is likely just the computer and screen cost at least $2,000, then when you add on the loading/dispensing mechanism, the actual metal casing and advertising banners, etc…, you get quite an expense.

    • Visitor [Join Now]
      Firstlawofnature [visitor]

      The machinery inside definitely costs much more than $2,000.

  8. Visitor [Join Now]
    iluvendo [visitor]

    Is Redbox coming to Honolulu Hawaii ?