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Redbox revenue still booming, but growth is slowing

November 5, 2009 |  4:29 pm

Redbox Good news for the three Hollywood studios lined up against Redbox: the $1-per-night DVD rental kiosk company's revenue growth slowed in the third quarter.

Good news for the four studios that have signed deals with Redbox: Its revenue was up 90% in the same three-month period that DVD and Blu-ray sales revenue plunged 13.9% and overall home entertainment revenue dropped 3.2%.

Redbox's parent company, Coinstar Inc., reported today that third-quarter revenue for its DVD rental subsidiary grew 90% to $198.1 million. In the second quarter, it grew by 110% and in the first quarter, it increased 155%.

A substantial part of that growth was driven by the increasing number of kiosks. Same-store sales were up a much less impressive but still healthy 26%, down from 33% in the second quarter and 35% in the first.

That raises the question of whether Redbox's growth curve will continue to bend down and eventually hit zero.

The company added 2,700 kiosks in the quarter, bringing its total to 20,600 as of Sept. 30, near its goal of between 21,000 and 22,000 by the end of the year.

20th Century Fox, Warner Bros. and Universal Pictures are in court with Redbox over their efforts to impose a window of several weeks during which the kiosk company wouldn't be allowed to offer their movies. The three studios believe that $1-per-night rentals undervalue their products and undermine more lucrative disc sales and video-on-demand.

Lions Gate Entertainment, Sony Pictures and Summit Entertainment have signed multiyear distribution deals to place their movies in Redbox kiosks. Paramount is in the midst of a test with Redbox that will last until the end of the year.

-- Ben Fritz

Photo: A Redbox kiosk at an Albertson's grocery store in Santa Monica. Credit: Lawrence K. Ho / Los Angeles Times.

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