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Outerwall Inc. Message Board

  • shortofaname_99 shortofaname_99 Aug 11, 2009 11:02 PM Flag

    CSTR shooting themselves in the foot

    From a report:
    Indeed, Eric Handler, analyst with MKM Partners in Washington, D.C., questioned how Redbox will be able to handle the financial commitments...

    “Potentially they could have well north of a $1 billion worth of commitments over the next five years,” Handler said. “That’s a lot of money for guarantees despite their growth.”

    Lionsgate’s deal, as did Redbox’s with Sony, does not include Blu-ray Disc.

    So they are guaranteeing to pay a huge amount to the studios for regular DVDs that are fast becoming obsolete! And they also lose the revenue source of being able to re-sell these DVDs as they have to destroy them. Looks like Redbox has no leverage and is forced to sign these uneconomical deals while at the same time spending a huge amount of money to set up kiosks that will be of no use in a few years.

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