Outerwall, whose main rival is Netflix Inc, forecast core diluted earnings from continuing operations of between 99 cents and $1.29 per share on revenue of between $535 million-$565 million for the third quarter.
Analysts were expecting a profit of $1.90 per share on revenue of $612.0 million, according to Thomson Reuters I/B/E/S.
Outerwall revenue forecast came in below estimates even as the company was expected to benefit from the release of a number of blockbuster movies on DVDs in the second half of the year.
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.
Thinking Outside the Outerwall
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 would not compare Game Stop to Redbox. Redbox does not make any significant money from retail sales or trading nor have they seen the type of Growth seen by Game Stop. Game rentals have not saved Redbox, Possibly because everyone is using Game Stop?
Yes, article did a good job of pointing out that the growth is Gone & the Declines have started.
+31% Dropped to +16% Dropped to -1% and DROPPING!
Article also pointed to the success of the new window for digital sales that comes BEFORE rentals and how much it is GROWING. The Studios are Thrilled.
Sales of Digital Movies Surge
Delaying Availability of DVDs, Rentals Nudged Consumers
By Ben Fritz
Updated Jan. 7, 2014 9:44 p.m. ET
After years of trying to convince consumers to buy movies online, Hollywood found a solution in 2013: Make it the only option.
Digital movie purchases surged 47% last year to $1.19 billion, according to data released by Digital Entertainment Group, an industry trade group. It was the fastest-growing category as total home-entertainment revenue inched up 0.7% to $18.22 billion.
A decade of decline?
"Unless Blu-ray Disc prices stabilize and box-office performance stays high, as it might with sequels to ‘The Avengers’ and ‘The Hunger Games’ on the table, another year of Blu-ray unit growth that is slight at best could yield a downward turn in spending for the format in 2014,” Arrington observed. “In any case, any reasonable amount of growth in Blu-ray is unlikely to prevent what will next year become a decade of decline for a once-thriving disc market.”
U.S. rental spending in 2013 slipped by 9 percent, falling to $4.3 billion, down from $4.7 billion in 2012
Average monthly U.S. consumer spending on physical video rental and purchasing dropped to $8.95 in 2013, down from $9.87 in 2012. Overall, however, U.S. consumers spent more on transactional home entertainment, including video on demand combined with electronic purchase, rental and subscription via the Internet. Transactional spending increased to $13.94 per month in 2013, up from $13.88 in 2012.
Didn't Outerwall deploy some Redboxes to Canada?
Yes, but even you had to laugh when the company pointed to of all things as 'opened emails' as a positive metric. What matters was revenue and it is slipping. If they were not buying back stock and shuttering redboxes, the numbers would be even worse.
Give consumers unlimited online access to original programming, TV shows and recent movies for $9 a month and you’ve got market driver — and winner.
That’s the finding of a new Strategy Analytics report that projects the North American over-the-top video market will grow 21% this year to $10.7 billion in revenue. Revenue is forecast to double between 2013 and 2019 to $18 billion. Of course, North America is home to OTT video market leaders Netflix, Amazon Prime Instant Video and Hulu Plus.
Well they did not scale down enough for the last quarter, I am sure you saw the results along with lowered yearend guidance. Now they are once again forced to test higher pricing in the hopes that will save a declining revenue model. Streaming continues to become more mainstream and continues to grow as can be seen by the results that Netflix produced in the same quarter.
5 - 7 years? Wall Street will start their punishment long before redbox ends. See stock history of both Blockbuster and Movie Gallery/Hollywood Video for more informed information.
Wall Street wants to know!