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Redbox Analyst Day - 38.6 M users +17.6% YoY 38,000 kiosks, more Blu-ray & movie tix?

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Old 05-18-2012, 10:18 AM   #16
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Problem is there's not a lot of room left for Redbox growth, perhaps in a year we'll see YoY revenue flatten out or get close to it. And the only reason why it's growing at all is to fill the void left by closing B&Ms, as those are the only mediums left to rent a new release the day it's available for sale. Once you add that 28 or 56 day window in, Redbox will lose a lot of its appeal.

Although the (obvious) statement that OD will be around for a while is true, this year will mark the first really significant YoY decline in rental revenue. There's generally a lag of several years between sell through and OD rental decline, as rental is buoyed temporarily by former purchasers, but it looks like sharp yearly rental declines are finally here and will remain.here.
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Old 05-18-2012, 10:30 AM   #17
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Problem is there's not a lot of room left for Redbox growth, perhaps in a year we'll see YoY revenue flatten out or get close to it. And the only reason why it's growing at all is to fill the void left by closing B&Ms, as those are the only mediums left to rent a new release the day it's available for sale.
Redbox is going to grow in 2012 not only from brick and mortar closures but also from advancing into the major grocery and drug chains it did not have before but also from taking over the pick of the litter Blockbuster Express locations.

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Once you add that 28 or 56 day window in, Redbox will lose a lot of its appeal.
Hasn't hurt yet. It seems consumers have just time shifted a few weeks and don't care much to wait a little more as long as new stuff still appears each Tuesday even if its time shifted from what it would have been before.

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Although the (obvious) statement that OD will be around for a while is true, this year will mark the first really significant YoY decline in rental revenue. There's generally a lag of several years between sell through and OD rental decline, as rental is buoyed temporarily by former purchasers, but it looks like sharp yearly rental declines are finally here and will remain.here.
Well, Netflix's transition and continuing abandonment of disc by mail physical rental business and Blockbuster's storefront closures is driving that perhaps even more so that declining consumer demand, as Redbox is thriving.

Still too early to say what the end of the year will bring especially as the better box office performance this year will eventually help rental performance as well and Redbox is tied more to new releases than Netflix ever was.
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Old 05-18-2012, 10:38 AM   #18
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I think the concept of Redbox selling movie tickets (especially at a slight discount for pre paying) is a smart one that only reinforces the benefits and traffic counts of consumer going to their physical kiosks and website.
What makes you think they will sell tickets at a discount? Fandango charges a service fee, why shouldn't Redbox?
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Old 05-18-2012, 10:42 AM   #19
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Redbox is going to grow in 2012 not only from brick and mortar closures but also from advancing into the major grocery and drug chains it did not have before but also from taking over the pick of the litter Blockbuster Express locations.
Also from advancing into grocery stores and drug chains? That's where they normally grow into, right? What do you mean by "also"? When B&Ms close, they're not going to put a Redbox in the same lot where the B&M was. The grocery or drug stores that don't have Redbox yet are either areas with existing B&Ms, or areas that already enjoy sufficient Redbox density (not to mention sites with former BB express kiosks that haven't yet been converted to Redbox).

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Hasn't hurt yet. It seems consumers have just time shifted a few weeks and don't care much to wait a little more as long as new stuff still appears each Tuesday even if its time shifted from what it would have been before.
How do you know that? Besides, isn't Redbox buying WB titles at retail to get around the window?
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Old 05-18-2012, 10:54 AM   #20
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What makes you think they will sell tickets at a discount? Fandango charges a service fee, why shouldn't Redbox?
I have no idea, but giving some sort of Redbox promotional credit for purchases for movie tickets would work.

You are right though about charging a service fee for tickets like Fandango would be a viable model as well.

Just having a kiosk in a zillion locations at consumer activity grocery stores and pharmacies and at every street corner is probably going to help sell tickets especially for tent pole releases.
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Old 05-18-2012, 11:07 AM   #21
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Also from advancing into grocery stores and drug chains? That's where they normally grow into, right? What do you mean by "also"? When B&Ms close, they're not going to put a Redbox in the same lot where the B&M was. The grocery or drug stores that don't have Redbox yet are either areas with existing B&Ms, or areas that already enjoy sufficient Redbox density (not to mention sites with former BB express kiosks that haven't yet been converted to Redbox).
They are projecting growth in 2012 from 38,000 to 45,000 kiosk locations.

IIRC Wedbush Securities’ Michael Pachter or Coinstar had stated that 50,000 locations and more than that kiosks were possible in the North American market.

Besides the grocery stores, Walmart Target malls and grocery stores a lot of growth is still available in stop and go convenience store gas stations and other non urban locations that Redbox has still not penetrated into so far. A lot of Redbox is in urban suburban concentrations and their is room for a lot more smaller town clusters as I remember someone saying last year.

That growth will slow down after 2012 I would imagine but more than 45,000 kiosks is a lot of locations.


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Originally Posted by Kosty
38,000 existing + 2,400 grocery + 5,000 Blockbuster location kiosks = 45,000+ rental kiosk locations soon.
Quote:
With closure of Redbox’s $100 million acquisition of Blockbuster Express business from NCR Corp. occurring next month, Pachter expects the kiosk vendor to install 5,000 Redbox units in the previous 10,000 Express locations. Notable Express locations include Safeway, Food Lion and Publix.
Growth in Canada
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Redbox believes there are up to 2,500 kiosk locations in Canada, including Walmart Canada and Couche-Tard convenience stores. It says Canada represents the third-largest disc rental market in the world, with $23.09 in annual movie rental spending per capita, compared with $19.82 per capita movie rental spending in the United States.
Quote:
The company has about 37,000 kiosks in 30,000 locations.
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Old 05-18-2012, 11:12 AM   #22
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deleted unintended double post

corrected version is next post including article
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Old 05-18-2012, 11:13 AM   #23
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Once you add that 28 or 56 day window in, Redbox will lose a lot of its appeal.
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Originally Posted by Kosty
Hasn't hurt yet. It seems consumers have just time shifted a few weeks and don't care much to wait a little more as long as new stuff still appears each Tuesday even if its time shifted from what it would have been before.
Quote:
How do you know that? Besides, isn't Redbox buying WB titles at retail to get around the window?
+17.6% YoY, 38.6 M customers and growing.

Their continued growth speaks for themselves under the 28 day delay and Coinstar and analysts made mention that the 28 day delay implemented last year had little to no effect. So that seems to be an non issue. Plus Redbox renewed their deals with Fox and Universal that included 28 day delays in exchange for inventory in March of this year, so that arrangement seems to be working OK.

That's different than 56 day delay though that Warner is demanding, that's why I said that it has not hurt yet. The 28 day delay for Fox and Universal apparently has not hurt either or else Redbox would not have renewed those deals a few months ago.

The 56 day delay for Warner is still an open issue as we don't have enough info to see.

I think the 56 day delay for major releases will be gamed well by Redbox as a workaround as they are well prepared for it this time around.

Quote:
Redbox, Universal renew deal with 28-day delay

Associated Press – Thu, Mar 1, 2012

LOS ANGELES (AP) — Cut-rate rental DVD kiosk operator Redbox said Thursday that it has renewed a deal to carry movies made by Universal Pictures 28 days after discs are made available for sale.
The deal extends through August 2014 a pact first made in April 2010.

Hollywood studios have differing views of how long Redbox, a subsidiary of Coinstar Inc., must wait after discs are released for sale. Some worry that consumers will rent instead of buying discs, which cuts into profits, while other studios don't see a negative impact from renting and selling at the same time.

Time Warner Inc.'s Warner Bros. said in January that it would not sell Redbox discs for rental until 56 days after they are released for sale, doubling the delay from a previous deal in a bid to encourage purchases.

But Redbox has been able get the discs through other sources, so now Warner Bros.' titles are available seven days after release.

Comcast Corp.'s Universal and News Corp.'s 20th Century Fox sell discs to Redbox at a discount as long as the kiosk operator waits 28 days after their release for sale.

Sony Corp., The Walt Disney Co., Viacom Inc.'s Paramount and Lions Gate Entertainment Corp. all provide Redbox with discs at a discount the same day they are released for sale.


Shares in Coinstar, which is based in Bellevue, Wash., rose $2.74, or 4.7 percent, to close at $60.97 on Thursday.
http://news.yahoo.com/redbox-univers...212143212.html
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Old 05-18-2012, 02:49 PM   #24
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+17.6% YoY, 38.6 M customers and growing.

Their continued growth speaks for themselves under the 28 day delay and Coinstar and analysts made mention that the 28 day delay implemented last year had little to no effect. So that seems to be an non issue.

The 56 day delay for Warner is still an open issue as we don't have enough info to see.

I think the 56 day delay for major releases will be gamed well by Redbox as a workaround as they are well prepared for it this time around.
Growth is because of expansion, and obviously that would way more than offset lost revenue due to windowing. You can't just saying the windowing is having no effect because Redbox is growing X amount.

So, given that you believe it has no effect, then obviously you think studios should eliminate rental windows, right?
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Old 05-18-2012, 02:55 PM   #25
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So why don't you just edit the previous post instead of creating a new one with the old post + a few additions? It makes for a lot of redundancy, or was that your intent?

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+17.6% YoY, 38.6 M customers and growing.

Their continued growth speaks for themselves under the 28 day delay and Coinstar and analysts made mention that the 28 day delay implemented last year had little to no effect. So that seems to be an non issue. Plus Redbox renewed their deals with Fox and Universal that included 28 day delays in exchange for inventory in March of this year, so that arrangement seems to be working OK.

That's different than 56 day delay though that Warner is demanding, that's why I said that it has not hurt yet. The 28 day delay for Fox and Universal apparently has not hurt either or else Redbox would not have renewed those deals a few months ago.

The 56 day delay for Warner is still an open issue as we don't have enough info to see.

I think the 56 day delay for major releases will be gamed well by Redbox as a workaround as they are well prepared for it this time around.

http://news.yahoo.com/redbox-univers...212143212.html
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Old 05-18-2012, 03:03 PM   #26
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They are projecting growth in 2012 from 38,000 to 45,000 kiosk locations.

IIRC Wedbush Securities’ Michael Pachter or Coinstar had stated that 50,000 locations and more than that kiosks were possible in the North American market.
Seems likely that revenue per kiosk will start to decline before the number of kiosks in existence is maxed out, meaning overall (OD) revenue will peak before as well. I think OD Redbox revenue will peak either next year or perhaps in 2014. Meanwhile though it looks like Redbox will be selling other stuff than OD out of their kiosks, more as time goes on. That will obviously take up space in the kiosk. Maybe when OD sales aren't up to snuff they'll put a spot in for Snickers bars and even popcorn. After all, Blockbuster sold those things.
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Old 05-18-2012, 04:37 PM   #27
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Growth is because of expansion, and obviously that would way more than offset lost revenue due to windowing. You can't just saying the windowing is having no effect because Redbox is growing X amount.

So, given that you believe it has no effect, then obviously you think studios should eliminate rental windows, right?

Read what I said. The growth is not the only reason.

Redbox and analysts have said that the 28 day delay has little effect but 56 days is too much for Redbox. They also would not have signed the 28 day agreement with Fox and Universal a couple months ago if they felt they lost more from the delay than they gain from having the studio cooperate with inventory.

I think 28 days seems to be a happy compromise that takes out the bulk of new release sales impact and still allows the DVD release marketing and theatrical marketing to help the rental turns.

I think 56 days is too much as the week 5-8 attrition is already pretty close to the end of week 4. There is not a lot of sales evidence to support that you protect a lot of sell through by going to 56 days that you have not already protected through 28 days.

But I understand both Warners negotiation position as the largest home video studio and also Redbox's position as well. They will eventually sort it out I think.

Some studios like Sony Disney Paramount and Lions Gate provide discs per agreement with Redbox without any delay at all.
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Old 05-18-2012, 04:47 PM   #28
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So why don't you just edit the previous post instead of creating a new one with the old post + a few additions? It makes for a lot of redundancy, or was that your intent?
My bad. That's what I was trying to do as to edit the other post.

That was not my intention to double post. Sorry about that.

I was trying to add the article as an edit to the original post but the connection I had where I was doing that was flaky and keep giving me a lost connection screen when I did the first version. When I edited the post and reposted it it ended up as a separate post.

I had to go and leave that site so I never saw that it was two separate posts.

The double post was unintended. I've already deleted it.

I usually just reedit the original post if I think no one has had a chance to read it yet or comment on it or if the changes are minor and overall follow the original argument. I usually preview my posts but also read them just after posting again and sometimes make clarifications right after I post something if I can see I'm not being clear or if it reads differently in tone or argument than I was intending.

If its a substantial factual change in a post after its been up and read widely, I'll highlight the change using bolding and/or italics. So I have no hesitation in correcting or editing a post with additional information.

I do sometimes create another post if I think its a new explanation or substantially differently phrased argument or thought that better is left as a new post for clarity. But that was not the intention here.

I don't have a deliberate intent on redundancy or repetitiousness, its more free form than that as it flows.

In this case, the newer post was done from on the road as an attempted edit of the previous post (as it showed up). I had copy pasted the submission when I started having connection errors and ended up as a double post.

It was not done intentionally, the second post with the article was meant to be the edited version posted.
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Old 05-18-2012, 04:59 PM   #29
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Seems likely that revenue per kiosk will start to decline before the number of kiosks in existence is maxed out, meaning overall (OD) revenue will peak before as well. I think OD Redbox revenue will peak either next year or perhaps in 2014. Meanwhile though it looks like Redbox will be selling other stuff than OD out of their kiosks, more as time goes on. That will obviously take up space in the kiosk. Maybe when OD sales aren't up to snuff they'll put a spot in for Snickers bars and even popcorn. After all, Blockbuster sold those things.
Well they can certainly sell more Blu-ray and videogames along with any thing that can be printed out in their receipt printer or have the same form factor as a physical object that is the same size as their optical disc rental cartridge.

I think its possible that their optical disc rental revenues may peak in 2014 but there is a lot of time between now and then for the dynamics to change.

Its also possible that their rental revenues will peak after Blu-ray peaks in the future from a hardware household penetration perspective which will not be for a few years from now as well.
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