With its kiosk DVD rental business in the doldrums, Redbox parent Outerwall reported uninspiring results for Q3 – as it promised better times ahead due in part to belt-tightening and share repurchases. The company, formerly known as Coinstar, generated $17.9M in net income, down 78.4%, on revenues of $552.9M, -5.7%. Analysts expected the top line to hit $562.2M. Earnings were complicated by several one-time events. The share price rose less than 1% in post market trading.
The company blamed “a weak release schedule… and the unfavorable timing and mix of content released” in Q3 for the anemia at Redbox. Revenues fell 10.9% to $438.0M, while rentals dropped 13.7% to 172.2M. Same store sales (they really ought to call it same kiosk) fell 11.8%. The average outlay per rental increased by 8 cents to $2.54 which the company attributes to the rising percentage of consumers who rent Blu-ray discs and video games – as well as its “more effective marketing promotions.” Early this month Outerwall pulled the plug on its Redbox Instant By Verizon streaming joint venture.
Execs say they remain upbeat about the business. In Q4 they expect to see 44 home-video titles that generated $3.52B at the box office, up from last year when they had 34 titles that generated $2.88B. The project that Redbox will end this year having generated as much as $1.89B in revenue
In June Sony extended its licensing agreement with Redbox through September 2015, picking up 25,000 Outerwall shares in the process. Last month Universal exercised an option to extend its revenue-sharing license agreement through December 2015. And this week Redbox extended its deal with Lionsgate through September 2016.
CEO J. Scott Di Valerio says that the companies “studio relationships remain strong.”