Redbox Parent Company Reports Decrease in Revenue, Blames Content and 'Unfavorable Timing' of Movie Releases
The company that owns Redbox movie rentals reported share price increases during the third quarter despite significantly lower profits.
Outerwall, which owns Coinstar kiosks as well, said shares climbed 7 percent in price in after-hours trading Thursday.
This report, while still showing decline, had better than expected quarterly financial results according to The Hollywood Reporter.
Revenue fell to $552.9 million from $586.6 million last year during the same period. Net income was $17.9 million, a staggeringly lower amount that $82.7 million one year ago.
The company operates many automated retail and coin-counting machines, but its biggest money maker is Redbox, a rental vending machine that brought in $438 million in revenue, down compared to $492 million. A "weak release schedule ... and the unfavorable timing and mix of content released" in DVDs were to blame for the lowered draw, the company said.
Although overall revenue was lower in 2014, Redbox reported that per-rental profits were up 3.3 percent to an average $2.54 per person. This larger amount comes from an increasing amount of Blu-ray and video game discs, which run at a higher rental fee.
Sony, Universal and Lionsgate all have licensing agreements with Redbox through the end of 2015 or longer.
"Our studio relationships remain strong. We signed a new agreement with Lionsgate and extended our existing agreement with Universal Studios," Outerwall CEO Scott DiValerio said on Thursday.
Over the past week, Redbox announced that it had scaled back the joint venture streaming service collaboration known as Redbox by Verizon. Redbox received a cash payment of $16.8 million as part of this agreement, a deal which had generated $70.5 million over its lifetime.
Still, the company's execs are optimistic about the business' future. In Q4, Redboxes will release 44 video titles that collectively made $3.52 billion at the box office and will therefore hopefully be popular among home video renters. Projections say that Redbox will generate up to $1.89 billion in revenue by the end of the year.