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Redbox Third-Quarter Revenue Up 90%

Fireworks12Redbox parent company Coinstar released its third-quarter investor update today, and the news was stellar. 3Q revenue from Coinstar’s Redbox and much-smaller DVDXpress brands jumped to $198.1 million, a 90% increase over the $104.2 million earned in the same period in 2008.

Redbox’s sales growth surpassed marketing and administration costs, as operating income doubled to $34.5 million and same-store sales increased by 26%. And there’s plenty of room to grow, according to Coinstar CEO Paul Davis, who said that “We think there’s a lot of white space” in the kiosk market.

Davis estimated that Redbox’s current share of the U.S. DVD rental market is about 15%, and said that digital delivery is still in its infancy and will not pose a threat in the near future. Overall, Coinstar estimates that its 2009 DVD rental revenue will reach about $770 million. This means the company is anticipating about $230 million in Q4 DVD revenue, which would be a 72% increase over the same period in 2008. The sanguinity of these projections demonstrates the company’s continued confidence in its business model and title aquisition capabilities.

As great as this news is for Redbox and its parent company, the true measure of the kiosk vendor’s strength will come in the fourth-quarter numbers, which will cover a period when Redbox is denied street date titles by three major studios.

Are you encouraged by this report, Insiders? Can Redbox keep the good times coming in the crucial final quarter of the year?

[via Video Business]

9 Responses to “Redbox Third-Quarter Revenue Up 90%”

  1. Member [Join Now]

    digital delivery i would say will not make a major factor till at least 2011… maybe late 2010… now if say comcast or someone could make a major deal what makes Pay per view movies 1.00 or even 1.99 then they will start to see problems… Little off topic but Why are studios throwing a fit over redbox renting movies for 1.00 a night… Some movies come out same day as DVD on comcast on demand for 4.99…. You have a VCR hooked up or a dvd player and you can record that movie just like watching something off tv… and just pass the movie around … you dont even need any burning exp to make a copy when its off PPV

  2. Visitor [Join Now]
    LB [visitor]

    With all due respect (and without passing judgement), recording a PPV movie off of a cable or satellite feed is illegal; not to mention sharing it. It is also technically difficult (the video signal incorporates Macrovision protection, which makes it impossible to record on most devices). If you would disregard legality, then why not just go ahead and download the movie for free before it has even hit theaters. It is also illegal to rent a DVD from a RedBox on a Monday and record it so you can watch it on Sunday (and/or keep the copy further in case you want to watch it again later).

    • Member [Join Now]

      has this changed ??? (shows how long its been since i ordered a PPV movie … I remember back in 1991 to 2004 i used to order and RECORD all of the WWE events and was told by comcast i had the rights to record the event…. Did they change it where they now block the movie/event

  3. Visitor [Join Now]
    Repo-Man [visitor]

    and the stock goes down……investors are waking up to the fact that Redbox may not be all it’s cracked up to be…kinda like with Obama

    • Visitor [Join Now]
      Mike [visitor]

      For all the Redbox enthusiasts out there, you would be advised that you should check out the recent filings to the SEC in regards to Coinstars financial condition.

      There is a reason why the stock is down 10% since the financials were released.

      The $1 a day price model is not sustainable and they further indicate that they expect additional problems if they can not obtain their product on release date.

      “Our inability to receive delivery of DVDs on the date of their initial release to the general public, or shortly thereafter, for home entertainment viewing could adversely affect our DVD services business.”

      This is a company that has a $100 million class action lawsuit against it for illegally charging late fees, is deeply in debt thanks to the costs of putting their entire network of machines in place, and has potential problems now and in the future of getting DVDs on release date. This is just starting to happen to them so the true impact will be felt in future financial reporting periods.

      They have people conditioned to pay only $1 a day, because that is what Redbox wants you to think your entertainment dollar is worth. Now they are test marketing the concept of higher pricing in certain areas and if that doesn’t work out for them, you might see Redbox becoming nothing but a scrap heap of metal in the future.

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

    Coinstar sure does know how to make things look rosier than they are. Remove any debt repayments from the calculation and things look great!

    Read through the actual report and things are not so happy and shiny.

    Net income per machine is under $100.00 per month. That means there is no margin for error in the Redbox model. If your costs go up because, say, the studios make life difficult for you, then you are done.

    I am glad to see that while they did not guarantee that the price tests would be implemented across America, the implication was certainly there. They need to do this sooner rather than later to get customers used to it.

    The stock dropped because 1) they missed their numbers and 2) the investors can see the writing on the wall even though Coinstar is trying to hide things from them.

    • Visitor [Join Now]
      Wayne [visitor]

      Is there anything to this story below that came out last Friday on MSNBC about Redbox overcharging customers?
      Is this happening nationwide? Is this another lawsuite? I never saw anything on this site about it. I am a first time vistor.

      $1 Movie Rental Costs Customers Hundreds
      I-Team Investigates redbox Rental

      By Reported by Jeremy Finley
      updated 12:24 p.m. ET, Fri., Nov . 6, 2009
      NASHVILLE, Tenn. – For Sean Johnson, it was the cost.

      “It was very cheap,” said Johnson.

      I-Team: Redbox Customers Overcharged

      For Michelle McCarrol, it was the ease.

      “Well, it was convenient,” said McCarrol.

      A lot of people like the convenience of redbox: A card is swiped at one of the machines for a $1, one-day rental.

      Allen Barry was a fan, too. But the movie rental company has some former customers seeing red.

      “If you want to enjoy provoking any of us, in the family,” said Barry, “we need to get into a conversation about redbox.”

      The Better Business Bureau revoked the company’s accreditation, giving redbox a D-rating due to nearly 300 complaints filed with the BBB and for failing to comply with the Bureau’s standards.

      That D-minus rating comes from the BBB out of Illinois, where the company is headquartered. The bureau said because of the volume of complaints and because redbox didn’t comply with the bureau’s standards, the company still has the D-minus rating.

      The customers the Channel 4 I-Team talked to claimed the company charged them for not returning movies that the customers said they returned within two days.

      McCarrol said the monitor on the redbox stand she used indicated she had returned the movies. She has instructed her bank to fight the charges.

      “My bank said, ‘Oh, redbox DVD? We have a lot of complaints on them,'” McCarrol said.

      The basic charge is $1 a day for one redbox movie rental.

      An additional dollar is charged for each night the movie is kept. If it isn’t returned, redbox charges the card used the full purchase price of the movie, usually about $28.

      The three people the I-Team spoke with live in different towns and used at least three different redbox rental stands.

      All claimed to have returned their movies within one or two days. But they weren’t charged one or two dollars: Their debit cards were charged for the full purchase price of the movies because the machines showed they didn’t return the DVDs.

      The unexpected charge then triggered overdraft fees for some customers.

      Johnson is on disability and couldn’t afford the overdraft fee.

      “With overdrafts, it knocked me down to, like, $197,” Johnson said.

      It isn’t just affecting people with limited funds. Barry said he usually puts a $20 allowance in his teenage daughter’s bank account each week. But when redbox mistakenly said she didn’t return two movies, it cleaned out her account and triggered big overdraft fees.

      Even after the company refunded the $60 cost for the two movies, it did nothing about the much larger overdraft fees.

      “That $1 became more like $150,” said Barry.

      “We acknowledge that occasionally issues arise due to both user error and, in some cases, redbox error,” the company said in a statement. “Regarding refunding overdraft charges, we will refund customers if and when an overdraft occurs as a result of a redbox error.”

      Johnson is still waiting to see if he’ll be refunded for the movies he said he returned and for the overdraft fees.

      “You live on a check month to month, and then you have something like this to come in and set you back, you know, in a big way, it’s really rough,” he said.

      To avoid being surprised by a bank account charged more than expected, users should enter their e-mail address on the video rental screen to ensure receiving an e-mail alert. Some of the customers the I-Team talked with did not take that precaution.

      Redbox said it is working to improve its rating with the BBB and that it has resolved the majority of the complaints registered with the BBB. full story)