The kiosk company already buys Warner Bros discs on the open market instead of accepting the studio’s insistence that it wait 56 days for new releases. And Paul Davis, CEO of Redbox parent Coinstar, says he’s “comfortable that we could deal with” a similar situation if Universal or Fox also try to change their current arrangement to hold new releases for 28 days before selling discs directly to Redbox. The kiosk company says it offsets the higher price it pays retailers for Warner Bros’ new DVD and Blu-ray releases by carrying fewer of the studio’s titles. “We’re not buying every single movie” from Warner Bros, he told analysts at the Pacific Crest Emerging Technology Summit. “We’re pretty selective.” The company expects to “learn a lot more as we go through the quarter” about how many discs to buy to satisfy consumers and still make a profit. Although Redbox is prepared to do the same thing with Universal and Fox, Davis says “I don’t believe that’s where we’ll end up.”
Davis remained mum about the details of Redbox’s new video streaming venture with Verizon. He says that their national subscription service, which will launch in the second half of this year, will offer consumers “the best of both worlds, both physical and digital.” The CEO noted, though, that about 20% of Redbox’s kiosk customers also subscribe to Netflix. He also offered little new about the pending deal to buy the Blockbuster Express kiosk business from NCR. It will add more than 9,000 machines to the 35,400 that Redbox currently manages. If antitrust officials approve the acquisition, then all of the kiosks would operate as a single network under the Redbox brand. “From a consumer standpoint it will be seamless,” Davis says.
He adds that he’s not worried about the reports showing that consumers are losing interest in discs, especially as digital movie streaming and downloading become more popular. DVDs are “still a high percentage of how consumers rent movies and we project it will last for a good while,” Davis says. Redbox isn’t just keeping its fingers crossed. Although it expects to add as many as 6,000 kiosks this year, “we continue to tick that (expansion number) down.” Meanwhile the company is diversifying with its recent efforts to add video games to the mix at kiosks — and joining Verizon in streaming and downloads.