Redbox suffered a brutal 11.8 percent plunge in same-store sales during the first quarter of last year. Overall revenue still grew as Redbox expanded its base, tacking on new machines and taking over the Blockbuster Express business.
Growth will be harder from here on out. There isn't a lot of unexploited real estate left upon which to introduce new rental machines where they won't cannibalize nearby kiosks. There aren't any other physical retailers renting DVDs that can close down to give Redbox market share. Outerwall made the most of the shrinking pie in DVD rentals by carving out a thicker slice. Now all it's left with is a pie that will continue to get smaller as consumers turn to streaming and binge-viewing older TV shows instead of renting new movies on DVD.
Outerwall pins some of the blame for its problems on a weak slate of theatrical releases from last year hitting the market this quarter, and that's why it's hopeful for a bounce during the latter half of the year. There's some validity to that, but the bigger trend points to fewer people buying or renting DVD and Blu-ray discs.
When is the last time you fired up your disc player? The answer probably isn't what Outerwall and Redbox want to hear.
I think the lack of good quality movies, for adults especially really have taken its toll. Remember when blockbuster was open, youd see people rent 3 or 4 videos at a time. Now I rent one video at a time. I also think that blockbuster allowed people to catch up in 5 yrs all the movies they couldnt see in the prior 15. And even the biggest hits...come on...how many times can you watch Pulp Fiction, Goodfellas and the Godfather? I say the whole movie industry , streaming or otherwise is in for abig shakeup. Partly social media like facebook is to blame as well because you cant be in the movie theater if you are on facebook and google groups and twitter. Im glad I have a fairly tight stop loss under this puppy.
But who can compete with them as far as pricing, , impulse shopping, and all the walmarts and supermarkets they have their vending machines in? Location, location, location. The numbers and their domination in this arena have to merge. And my opinion is this will skyrocket. The numbers dont make sense. It would be like buying microsoft 5 yrs after they came out and had the majority of the market share and still growing. Who can oust these guys. Besides...when I leave my supermarket or walmart...Im hungry. Whats the first thing a person wants to do when he is hungry? Eat and.........yep, watch the tube! And those late fees I pile up thinking I will return it the next day...whew!
The numbers will continue to Decline as the world continues to shift to online. You are buying Old Technology with a Shrinking future. Dominating a Shrinking business is Not where you want to be. See Blockbuster for a good comparison.
Streaming still can't compare to a BluRay quality picture, and getting new releases in true HD for $1.50 is the best entertainment value anywhere. There is a RedBox everywhere you go right now, so the transactions are convenient, and their targeted emails, promotionals, and customer service are all very effective.
Eventually infrastructure will be built out to the point where streaming can compete with the quality of BluRay and perhaps future court rulings will change, so that the current First Sale Doctrine does not continue to give RedBox a massive pricing advantage over streaming (ever wonder why the same movie is several times more expensive when streamed at lower quality?), but OUTR is still really cheap right now, and should continue to make a ton of money for at least several years. Mgmt is aggressively buying back shares, and the huge short position will come under pressure as earnings come out.
So, bring on the 9 thumbs down, but now is still a good time to flip to the winning side, and "outerwall is like blockbuster" is a pretty lazy analysis. If anything, the weak hollywood offerings of late have been a gift to shorts who are a little to slow to read the writing on the wall.
fear and greed14 is 100% correct.
i'm glad there are still longs on this board. it's just a shame we have one short spammer who continues to harp on the same old tired talking point just to keep his agenda looking fresh.
even if you don't believe in the OUTR long term story, the absurd P/E and price/cash flow warrants a move up to fair valuation in the next few months.
Netflix with their Super HD & soon 4K streaming, Vudu has exceptional quality. The gap is already close to being closed. Having said that, I don't know if the general consumer even cares. Look how little market share Blu-ray has. Redbox pricing is not as wide as it may seem. Average out is two days and there are sites out there now where you can buy high-def digital new releases before they get to Redbox. for $5.