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Citing 28-day delayed new release titles and softer than expected Blu-ray performance, Redbox parent Coinstar has lowered its full-year 2010 financial expectations. Coinstar also dropped its expected Q4 2010 earnings per share, which will be announced February 3, from between 79 cents and 85 cents to between 65 cents and 69 cents.

Coinstar CEO Paul Davis offered the following explanation for his company’s bearish outlook on earnings:

“Overall, the performance of the Redbox business during the fourth quarter was not in line with our forecast  . . . This was Redbox’s first holiday season with 28-day delayed titles, and we underestimated the impact that the delay would have on demand during the fourth quarter. We also expected much better performance from Blu-ray and had purchased to a higher level of demand.”

Davis did note several bright spots in Redbox’s performance:

“Nevertheless, Redbox revenue grew 38% year over year in the fourth quarter . . . Consumers rented over 144 million movies during the quarter and same-store sales increased 12.5% year over year in the fourth quarter.”

Will the company be able to absorb these setbacks and keep expanding, or should Redbox fans be worried?

(via Home Media Magazine)

28 Responses to “Coinstar Lowers 2010 Financial Expectations”

  1. Visitor [Join Now]
    Vernon Dent [visitor]

    Paul Davis is a fool!!

    He should have correlated the decline in *box office* revenues, due to less than great movies in 2010, as the reason for subsidiary’s results.

    The revenue increase was exclusively based on the huge increase in the number of newly installed kiosks.

  2. Visitor [Join Now]
    UBM [visitor]

    Redbox simply needs to advertise it strengths, & by that I mean advertise
    on TV. I can’t wath anything on TV without two or three replays of the
    “Go VOD, don’t wait on a kiosk” commercials COX plays for its VOD service.
    A lot of people are paying that high $5 a movie price because they don’t
    know anything about the kiosks unless they are told about it.

    Redbox needs to advertise the following:
    *Great Price for entertainment in these tough economic times.
    * A great selection at the kiosk, that does include hit movies
    (saying something about the deals they have with Disney and Paramount,
    which aren’t affected by the 28day cycle)
    * Great Customer Service including member rewards like Free Movie Mondays.

    if they do that, then they could reverse the loss in sales trend/ negativity about kiosks!

    • Visitor [Join Now]
      firstlawofnature [visitor]

      Not advertising on TV, radio etc. keeps the prices low. Don’t you think the big ugly redbox with $1 plastered all over it the best form of advertising?

      Wall street is negative on kiosks now but consumers still love them. They need to do nothing different other than continuing to focus on pleasing consumers.

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

    Movie watching is about convenience not price. Redbox should raise their price although it may be too late now. This downward trend should continue into the next quarter.

    Full Disclosure: This morning I cleared a short option that I had taken in this stock. I suspect there may be more downside but I wanted to avoid a suckers rally (looking at you FLON). I have not posted on this site while I had my short option.

    • Visitor [Join Now]
      Tee [visitor]

      They are only down 25% today, I think I told you so is in order!!! Time to rethink the pricing, $2 for the 1st day $1 for additional day’s – period!!!!

      • Visitor [Join Now]
        crivit [visitor]

        I don’t see how raising the price will really help them. If the price goes to $2 a day I’m more than happy to wait untill it comes to cable to watch it. I’m sure for everyone that would pay the higher price there will be someone else like me that just won’t bother renting from them anymore.

    • Visitor [Join Now]
      firstlawofnature [visitor]

      Ebbs and flows your smallness. Today doesn’t make you or me right or wrong. I note though still up over 50% from a year ago. I’m buying today again.

      ‘Movie watching is about convenience not price.’

      For you this is true but only a fool would say this is how everyone views it. The last thing I want them to do is raise prices. $1 stays and $1 still wins.

  4. Visitor [Join Now]
    Consumer [visitor]

    The other thing which was very interesting and odd at the same time was managing the “return anywhere” feature of Redbox. They had trouble during the quarter with some kiosks being short of product and others having too much. I had not heard that before from them.

    I was not surprised with the Blu-ray numbers. The average consumer that watches Blu-ray’s is not the same customer that uses Redbox. They are first movers and they want their movie within the 28-day window. They will pay a higher price to get it within the 28-days or they will just buy it.

    • Visitor [Join Now]
      Aiden [visitor]

      Totally agree. The Blu-ray consumer likely has a lot more discretionary income, and they probably buy movies to collect as opposed to renting. In addition, something like only 20% of the U.S. households have a Blu-ray player (including gaming systems that have blu-ray technology), so the market just isn’t all that big. Those blu-ray movies are just sitting in the boxes taking up space– plus they probably take a lot of the open-to-buy $$ Redbox has each month. Not worth it. Good for them for trying to stay ahead of the curve, but I think it’s time to go back to basics!

  5. Visitor [Join Now]
    will [visitor]

    Redbox’s near-term problem is fixable (better inventory controls) but Redbox fans should be worried in the long term because the rate of same-store sales growth is fading and physical media is in decline. Sony just announced the closure of a CD plant in New Jersey citing the shift to digital media (they consolidated the DVD part of the factory to Indiana last year.) Let’s face it, on-demand streaming is the wave of the future. Netflix is perfectly positioned to catch the wave; Redbox is a sitting duck.

    • Visitor [Join Now]
      Firstlawofnature [visitor]

      Physical media has some advantages over digital which I believe will keep consumers interested in discs for years to come. Netflix was a ‘sitting duck’ before they developed streaming. Who’s to say Redbox can’t jump the chasm to digital nirvana as well? They are the ONLY possible partner one could use to develop a true hybrid service to compete with Netflix. Generic VOD offerings that all the major players have cannot compete with Netflix. They need something else to stand out and Redbox could be that something else to the right entity.

      • Visitor [Join Now]
        Joe Schmuck [visitor]

        Could this mean the end of……….
        No, it couldn’t be……..
        No, Don’t say it……….

        No more FREE CODES !!!!!!!!!!!!!

      • Visitor [Join Now]
        John Small [visitor]

        Redbox is looking like the ugly girl at the prom. No one wants her FLON. She won’t even put out.

        • Visitor [Join Now]
          Firstlawofnature [visitor]

          Yeah no one wants her – the billion in revenues is a mirage. I get it – redbox is doomed and all the independent vid stores will thrive.

          What do you know anyway? You still can’t figure whether they make a profit or not.

          • Visitor [Join Now]
            John Small [visitor]

            I know that I made over 25k shorting this dog. Hope you run it up so I can do it again.

          • Visitor [Join Now]
            firstlawofnature [visitor]

            So you never lost any money shorting it in the past? That was your first trade in coinstar?

          • Visitor [Join Now]
            John Small [visitor]

            I rarely short companies but this one was ripe for the picking. Just looking at the release schedule would have shown you how bad things were going to be.

            Why would I invest in Coinstar mini-flon? It is a good way to lose money.

    • Member [Join Now]

      It may be the wave of the future, but definitely not the near future. The current infrastructure can’t handle the load if everyone simply switched to VOD today. The bandwidth is simply not there yet. There has to be a whole lot of investment into new infrastructure. We would know if this build up of infrastructure is currently happening. I’m not hearing about it. I’ll believe the demise of DVD when I see it. I give it at least 10 more years.

  6. Member [Join Now]
    ChadCronin [chadcronin]

    I still mostly rent because of codes. I use them to get $1 off Blu-ray rentals. I don’t rent DVDs anymore. I wouldn’t mind paying the $1.50 but I often find it hard to find titles I am looking for. I also agree that there hasn’t been much out lately that I have wanted. I usually will rent 4 or 5 titles one weekend a month now. The rest of my time is on VOD, Cable, and Netflix Streaming

  7. Visitor [Join Now]
    Saniffane [visitor]

    Are you able to please deliver me a mail. I genuinely like your style.