By Chad Henage -Motley Fool
Outerwall has retired more than 14% of its outstanding shares in the last year, but the company's net long-term debt has ballooned from just over $300 million last year to more than $660 million this year. What makes this an even harder pill to swallow is that the company's most recent repurchase occurred when the stock was at more than $70 a share. With the current price in the 50s, to say this is a questionable use of cash is an understatement.
The bottom line is that Outerwall's main business is struggling and its fastest growing business doesn't mean much to the company's top line, much less the bottom line. In addition, Outerwall is pillaging its balance sheet to buy back shares that have fallen far lower than the buyback price. If investors are looking for a sign of a turnaround, they need to look elsewhere.
And...here is the problem with Google Fiber...they will be very slow to roll out nation wide because they don't even have complete acceptance even in Kansas City.
The numbers will only go dead when Google roles out Google Fiber nation wide like they have in Kansas City...and the cost of an internet rental drops far below 4 dollars. Only at that point will Redbox begin to decline. Until then, ride it up.
Anything that redbox does that will educate their customers to the ease of streaming is Not in their favor. Blockbuster learned that lesson the hard way. Would Blockbuster waste all of those brick and mortar stores it took them decades to build? How many CD's are you burning these days? Things just change. I agree this company needs a plan B, but so far multiple plan B's have been shuttered. They could open in Best Buy and Target, but the company is already speaking to being fully penetrated and have actually removed or moved existing machine because of cannibalization.
if you are right, and thats a big if...why cant redbox sell codes you could enter on your computer to watch streaming on your own computer or tv. Maybe even partner with netflix on this? Do you think they will actually waste all those machines in walmart and supermarkets it took them years to get in? If just one creative moron in this company has a plan B for the vending machines if your prediction is right, we will explode. In fact, whats stopping them from expanding into target and best buy and even other countries? Sure they could go the way of blockbuster. But they dont require employees and huge rental spaces so everything is all profit pretty much.
Sentiment: Strong Buy
After much speculation, HBO will finally launch a standalone over-the-top video service not requiring a cable/satellite/telecom subscription in the United States in 2015, CEO Richard Plepler told an investor group in New York.
Programming features eight major current series, including “The Good Wife,” “Blue Bloods” and “Survivor,” in addition to more than 6,500 episodes of CBS Classics, such as “Star Trek,” “Cheers,” “MacGyver,” “Twin Peaks” and “CSI: Miami.”
“CBS All Access” also offers live streaming of local CBS television stations in 14 of the largest U.S. markets. Notably, programming will be available the day after the shows air on network TV, with an eight-day delay on mobile devices for primetime series only
"A Promising Defensive Play In A Treacherous Market - StreetAuthority Network By John Morgan
7 hours ago
By: Erik Gruenwedel - 17 Oct, 2014
With Netflix acknowledging that a recent $1 price hike for new customers contributed to the SVOD pioneer’s soft domestic subscriber additions in the third quarter, B. Riley & Co. analyst Eric Wold says any plan by Redbox to increase the daily disc rental rate is not a good idea.
Netflix, which had projected more than 1.3 million new domestic subs, finished the quarter (ended Sept. 30) with 980,000 new subs — 31% less than it added during the previous-year period. The result help send Netflix shares into a tailspin.
Meanwhile, Redbox has been testing daily price increases from 13% to 25% for DVD and from 17% to 33% for Blu-ray Disc in select markets, according to Wold.
The analyst contends that if Netflix, with its significant level of original and exclusive programing, is experiencing pushback from a 12.5% price increase, there is validity to concerns about a Redbox price hike. At the same time, Netflix’s price hike is recurring while any kiosk price increase would only affect an individual disc rental.
“We believe it provides a valuable comparison — especially when you consider that Netflix’s content is unique and there is nothing unique about the content offered in Redbox kiosks, since a good portion of that content is actually available 28 days earlier through other sources,” Wold wrote in an Oct. 17 note.
With the average Q2 revenue per disc rental transaction around $2.63, possible price increases from 13% to 33% would narrow the gap with transactional VOD — a reality Wold believes could drive more consumers towards digital.
The analyst said average revenue per kiosk increased less than 20% following Redbox’s 20% price hike in 2011, underscoring consumer pushback to the higher prices.
Then why were they not doing it years ago? Because they did not need to. Free rentals are becoming more common and more frequent. That is not a assign of strength.
Watch as revenue continues to slip! It also is not $1.25 - $1.60, it is $2.50 - $3.20 as days out are more than one.
dvd's aren't dead - just dead heads that say so like PC's were dead - Redbox is still to the Mass 70%+ that wont pay $4.99+ and UP for something can get at $1.25-1.60 - still you shorts don't see the 35,900 domestic Redbox kiosks and Outerwall operates foreign kiosks so far in Canada, the UK and Ireland. The resale of used DVD & Blue-ray & Games at Kiosks; the "ecoATM"; & Coinstar kiosks with alternative gift card vs cash;
revenue from third party marketers, AND a plus over Brick & mortar.
Redbox Instant Was Doomed from the Start
7 Oct, 2014 By: Thomas K. Arnold
There’s only one thing that surprised me about Redbox pulling the plug on its streaming video joint venture with Verizon Communications, Redbox Instant by Verizon: Why did it take so long?
Back when I attended the big press conference at the Consumer Electronics Show in Las Vegas in January 2012, announcing the JV (it didn’t actually launch until March 2013), I had trouble understanding the business model.
Generally, if you take aim at a competitor — in this case, Netflix — you build a better mousetrap, as they say. Apple entered the cell phone market with the iPhone; Sony jumped into the video game business with the PlayStation.
But from the very start, Redbox Instant appeared to be a poorly conceived venture that consistently failed to take advantage of Netflix’s chief weakness: a limited selection of content, particularly on the movie side, which despite its grand success remains a depository for studio castoffs.
Of course, if Netflix couldn’t strike a deal with Hollywood for better product, what would make anyone think Redbox could do it? But even if the two services had similar (weak) content offerings, why has Netflix exploded while Redbox, well, appears to have imploded?
One factor was that Netflix already had an established base of customers accustomed to the subscription model, through its hugely successful disc-by-mail rental service. All Netflix had to do was migrate those customers over to streaming by making the viewing experience even easier and simpler, which it was able to do by eliminating the hassle of having to send back a disc.
The other advantage Netflix had was in brand awareness. When Netflix launched its streaming service, it was already known for sending movies and other content directly to consumer homes, albeit in physical form. Redbox, on the other hand, was known for its vending machines, a model in which consumers had to go somewhere to get...
uh, i actually predicted his mother and the horse banging incident 5 months ago....please state your prediction date