Action to Take –> The DVD business will eventually mature, though not before a Netflix-inspired spurt in the next 12 months. In coming years, new kiosks ideas should augment those cash-flow rich mature businesses of coin-counting and DVD rentals. Analysts have been raising their estimates, even as the share price continues to fall. At just 12 times next year’s projected EPS, shares discount Coinstar’s still-robust growth that lies ahead.
Gregg Kaplan, president and COO of Coinstar Inc. spoke by phone with editor Burney Simpson last week after the Bellevue, Wash.-based kiosk operator announced deals with CVS/Pharmacy and ecoATM. There are about 19,000 installed Coinstar coin-counting machines installed worldwide; its redbox device has helped change the DVD rental business. This is an edited version of Kaplan’s remarks.
The Company reported revenues from continuing operations of $5.5 million for the three-month period ended June 30, 2010 a 3% increase compared to $5.4 million for the three-month period ended June 30, 2009. Core ATM revenue was approximately $5.4 million and revenues generated from the DVD rental kiosks were approximately $60,000. Gross profit from continuing operations was $2.5 million, or 45.6% gross margin, for the second quarter of 2010 compared to $2.6 million, or 47.6% gross margin, for the same period of 2009. Approximately $106,000 of the increase in cost of revenues year over year related to the DVD business.
“(Brick-and-mortar stores) are falling like dominos. Soon it’s going to be Netflix and redbox, if it’s not already. They serve two needs, redbox for new releases and Netflix for older movies,” Mendelsohn said.
Total spending on video rentals declined 4.9% to $3 billion as retail chain Movie Gallery closed stores, and consumers flocked to the fast-growing number of $1-a-night DVD rental kiosks like the ones operated by Redbox. Kiosk revenue was up 55%.
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EntertainmentXpress, the entertainment distribution division of Public Media Works, Inc. /quotes/comstock/11k!pubm (PUBM 0.75, 0.00, 0.00%) , today announced it has begun rolling out its DVD digital entertainment platform in key Pizza Hut locations operated by Aurora Huts LLC of Mars, Pennsylvania. Aurora Huts is one of the largest and credited to be one of the most innovative Pizza Hut(R) franchise organizations in the world with over 155 stores in Pennsylvania and Florida.
Historic ‘Blockbuster’ Store Offers Glimpse Of How Movies Were Rented In The Past
As you evaluate entertainment kiosk programs, take into account the likely consumer awareness of and preference for different operators’ brands. Which brand will have the strongest “pull” to bring added foot traffic to your store or venue?
Next in line for most viewers is the Kiosks where movie watchers rent movies from a retail outlet like RedBox with more than 40% saying they use this type service, while 26% of these consumers indicating a willingness to increase use of this venue.
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