“In our opinion, this price would still be more attractive than other rental options and could actually drive a margin boost to Redbox since the price increase would benefit all transactions, while the debit fee hike would only impact about half of all transactions,” Wold wrote in a Sept. 21 note.
Shares of coin-counting machines and DVD rental kiosk maker Coinstar (CSTR) are down $1.37, or 3%, at $42.53, double the market’s decline, despite an upgrade today by JP Morgan’s Paul Coster from Underweight to Neutral, based on valuation considerations.
Only days after reporting $363.9 million in quarterly revenue and $79 million in operating income, up 34% and 99% year-over-year, respectively, DVD kiosk company Redbox has released some more impressive figures. With more than 27,000 kiosks spread across the country, the Coinstar-owned service is now seeing an average of 55 million monthly rentals and up to 40 rentals per second.
Rental kiosks have surpassed traditional retail shops as the go-to option for film fanatics eager for convenience and low prices. Though Redbox and Blockbuster Express command the lion’s share of consumer interest in the novel service, retail company FYE is now eying up the relatively young industry with a run of new rental kiosks. Could a full-fledged service be in the cards?
Revenue for the DVD rental kiosk operator rose 33.8 percent for the latest period to nearly $364 million, at the lower end of company projections, as management says it is looking to attract Netflix users upset with a recent price hike.
On June 9 Redbox parent Coinstar announced it would install roughly 1,400 coin-counting kiosks in Safeway stores in the United States and Canada this year, and that could spell good news for Redbox kiosks as well, according to one analyst.
I’m no legal eagle, so there won’t even be an attempt to handicap this licensed trademark battle on my end. I will only argue that NCR must be doing well with the kiosks if it continues to expand this aggressively. Would a name change really be that detrimental?
The new pricing scheme starts May 27 — all to take advantage of the big summer movie season. For its newest releases, one-day rental fees are now $2.99, with its slightly older film releases at $1.99. Previously, Blockbuster had had a rental policy of $4.99 for a three-day rental period.
According to a market research company, NPD Group, redbox topped Netflix with an impressive lead in January. Redbox accounted for 35 percent of DVD rentals, with Netflix trailing behind at 30 percent.
Despite this, average revenue per kiosk improved 16% each quarter in 2010, according to NCR, which estimates that the additional 3,000 units will generate $200 million in revenue in 2011.
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