Redbox Movie Rentals Plunge 24%
February 04 2016 - 7:00PM
Dow Jones News
Outwerall Inc.'s Redbox reported a 24% plunge in movie rentals
last quarter, signaling that even budget-conscious consumers are
abandoning Hollywood's once-lucrative DVD business.
The drop contributed to a 17% decline in Redbox revenue during
the three months ended Dec. 31, to $407 million, and a 50% decline
in its operating income, to $62.6 million. Outerwall shares were
down 24% in after-hours trading, to $25.00.
Redbox rented 135.8 million DVD, Blu-ray and videogame discs in
the quarter, compared with 179.5 million in the same period a year
earlier.
The company attributed the drop to "an accelerated decline in
the physical market," as well as fewer titles available to rent and
lower demand after a recent price increase.
Redbox's decline is substantially larger than the 8% drop in DVD
and Blu-ray disc rentals and 12% drop in sales that the Digital
Entertainment Group, an industry trade group, reported for 2015.
Overall home entertainment revenue fell 6% in the U.S. last year,
as digital sales only partially made up for declines in physical
media and online rentals.
Not long ago, Redbox was seen as a dire threat in Hollywood,
drawing consumers to its inexpensive $1-a-night DVD rentals at
kiosks that proliferated at grocery stores and other retail
locations.
But as more people switch to digital streaming and download
options, Redbox has struggled to find a way into that business. A
short-lived joint venture with Verizon Communications Inc. launched
in 2012 and shut down in 2014 after it failed to attract many
consumers.
In December, former Warner Bros. executive Mark Horak left his
post as Redbox president after less than two years on the job,
during which he unsuccessfully tried to transition the company to a
digital strategy. Outerwall Chief Executive Erik Prusch is serving
as interim president of Redbox.
In a statement, Mr. Prusch said Outerwall will manage Redbox
"for profitability and cash flow, and we will continue our focus on
expense management, operational efficiencies and network
optimization."
The company plans to remove between 1,000 and 2,000 Redbox
kiosks this year. It had 40,480 at the end of last year.
Outerwall stock closed at $32.69 Wednesday before financial
results were released.
Write to Ben Fritz at ben.fritz@wsj.com
(END) Dow Jones Newswires
February 04, 2016 18:45 ET (23:45 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Verizon Communications (NYSE:VZ)
Historical Stock Chart
From Aug 2024 to Sep 2024
Verizon Communications (NYSE:VZ)
Historical Stock Chart
From Sep 2023 to Sep 2024