Redbox does better than expected in first quarter
Redbox's parent company said that its financial results were better than projected in the first three months of the year as more people rented DVDs from the ubiquitous kiosks. Also, a workaround in its ongoing feud with Warner Bros. proved cheaper than expected.
Coinstar Inc. said its first-quarter revenue would be between $567 million and $569.2 million and its earnings, before certain costs are deducted, would be between $127.9 million and $130.1 million. The Washington-based company had previously said those figures would be between $530 million and $555 million and $94 million to $104 million, respectively.
The unexpected good news sent Coinstar shares up 14% in after-hours trading Thursday after their closing at $61.31.
In its statement, Coinstar said that revenue from Redbox was higher than predicted in part because consumers did not react as negatively as expected to a price increase from $1 night to $1.20 per night implemented in late 2011.
Demand was particularly high for several titles highlighed by the company, including "Moneyball," "Puss In Boots," "50/50," "In Time," "Abduction" and "Mr. Popper's Penguins."
In addition, Redbox found it easier than expected to acquire Warner Bros. DVDs through alternative means after the studio refused to sell them to the kiosk company unless it agreed not to rent new movies until 60 days after they went on sale — a provision Redbox refused to accept. Instead, Redbox has bought Warner movies such as "Happy Feet Two" and "J. Edgar" from retail stores or wholesalers.
Universal Pictures, which renewed its contract with Redbox in March, declined to follow Warner's lead. It stuck with its existing "window" of 28 days from the time DVDs go on sale until they can be offered in discount kiosks.
The news puts to rest fears that Redbox would be harmed this year by its fight with Warner or consumers' defection to digital video-on-demand rental options. However Redbox's strong numbers could be more bad news for studios that see low-cost kiosk rentals as a factor in the ongoing decline of more profitable DVD sales.
Coinstar will report its complete first-quarter financial results April 26.
— Ben Fritz
Photo: A family at a Redbox kiosk. Credit: Redbox.