Comments on: Great (or Not Great) Expectations: Redbox Q4 Results Eagerly Anticipated

By: Firstlawofnature

Firstlawofnature — Wed, 10 Feb 2010 21:59:23 +0000

From Lions Gate. Sadly other studios are missing the boat…

“Last year we made a call that went against the grain on RedBox and its working for our product. Gamer was our second theatrical title under the RedBox deal and like Crank 2, it worked everywhere. We projected to convert it 145% of box, it rented well at RedBox with no discernible impact on sell through and it performed well at other rental outlets. It was also our first title to go day-and-date on VOD concurrent with its DVD release. Gamer VOD revenue is expected to convert at close to 20% box.

Two years ago our VOD title converted under 4% about in last year at around 8% to 10%. In other words VOD revenues on Gamer will be about $3 million higher than they would have been two years ago and we believe this is largely incremental revenue. And we expect to see other innovative and accretive windowing of products responsive to our consumers’ taste and preferences later this year.”

http://seekingalpha.com/article/187857-lions-gate-entertainment-corp-f3q10-qtr-end-12-31-09-earnings-call-transcript?page=-1

Nothing has changed. They’ve clipped a billion in revs with partial studio support. They will reach $2 billion with or without studio support. Get used to it.

By: Cypherdude

Cypherdude — Wed, 10 Feb 2010 20:16:26 +0000

I also suspect Redbox’s revenue will increase. Renting DVD’s through kiosks is an idea whose time has come. Because I have rented VHS tapes, then DVD’s, first through a B&M rental store and then via mail through Blockbuster then Netflix, I still can’t believe they’re doing it.

If you’re working in a B&M rental store, it must feel strange being replaced by a kiosk box, red or blue. For owners of B&M rental stores, it must be frustrating being hit first by online DVD rentals, then by online streaming, now by kiosks (especially when the Redbox rental is FREE!!!!). Kiosks will be the final nail which drives small independent B&M rental stores out of business. Online rentals and kiosks have already greatly reduced the number of Blockbuster and Hollywood video B&M’s.

By: Mo Money

Mo Money — Wed, 10 Feb 2010 19:20:44 +0000

Clearly the market is betting revenues will be strong and margins will be thin. Ultimately, the market needs to value this enterprise not on the current cash flow but on future value of a recurring customer.

This company has the opportunity to offer an “all-you-can-eat” Netflix like plan. Since Netflix won’t carry new releases for 28 days after release, Redbox has the opportunity to fill that gap.

Also, as postage rates go up, Netflix will have to raise prices. That will allow Redbox to also raise prices. The key is the margins will be able to dramatically expand.

By: Lauren Klinker

Lauren Klinker — Wed, 10 Feb 2010 18:56:59 +0000

Thanks for sharing, i need some time to think about this. Can't wait to see what you write about. Go for it! Follow me on Twitter

By: John Small

John Small — Wed, 10 Feb 2010 17:51:19 +0000

I suspect that the gross revenue increase should still be a strong number since they are continuing to roll out machines and even with the reduced availability of New Releases people are still likely to rent something if they’ve made the trip to the Redbox.

The real number to watch is the Cost Of Goods. Redbox runs on such tight margins that the workaround should be causing these to rise a fair bit and push the net income into the red.

Sadly, Coinstar reports as a whole company and has a tendency to hide their negative numbers under the revenue streams of their other ventures.

Hopefully the analysts will ask the right questions and get real answers this time around.