Coinstar Acquires Rest of Redbox after Impressive Growth

paidContent reports that Coinstar has bought out McDonald's and other investors to take control of DVD rental kiosk leader Redbox. Redbox has more than 12,000 kiosks installed so far, and expects to add more than 8,000 additional kiosks in 2009. The reason Coinstar acquired Redbox? From the earnings call:

In terms of how those installations affect financial performance, we expect our DVD revenues to increase about 80% in 2009 to between $690 to $750 million with corresponding EBITDA of 14% to 16%. These margins reflect a network mix that’s skewed heavily to immature machines which typically experience lower margins as they ramp. To that point, as shown on chart nine the revenue ramp continues to remain strong with year three revenues of over $50,000 per unit.

They also shared some interesting market share data:

When we made the initial investment in 2005, we thought we might be able to get 15% share in any given market. As is shown in chart 13, Houston and Denver, two of our oldest markets would suggest our ability to gain more than 20% share, a result much greater than expected. We’ve achieved this growth with relatively minimal marketing so you might ask why are so many consumers using Redbox?
Consumers tell us price point, ease of use, convenience, selection, the return anywhere option and online reservation feature guaranteeing in stock status. One of the more startling revelations as shown on chart 14 is Redbox net promoter score which is a major that asks, “Would you recommend this product or service to your friend?” Redbox’s net promoter score was a whopping 80% putting it in elite company with the likes of eBay, Apple, Amazon and others. A net promoter score of 60% is considered quite good, a net promoter score of 80% is outstanding.

In related news, Inside Redbox reports that Redbox will also charge extra for Blu-ray rentals.

Comments

[Edward R Murrow]

I love spin. McDonalds is one of the few Dow companies that is absolutely not hurting for money and yet they sold their interest in Redbox. Can anyone but me read between the lines on the future of Redbox?

[Patrick]

I don't understand why (besides Netflix) redbox doesn't have 100% marketshare. I mean, seriously. $8 a night for Blockbuster, or $1 for Redbox?

[Seth]

I see a lot of interest in this company on internet forums where "deals" are discussed. The smart middle class and lower middle class are using this service quite a bit. They like it.

I have to admit that I have been intrigued by the machines myself when I see them. The low price plus the instant gratification is a grabber.

It's interesting to wonder about if Netflix has bought this company. Could it have complimented their market? Or would it have confused customers if say you could return Netflix movies to Redbox machines.

Probably would have been confusing.

But if they kept them as separate brands...

I don't know. I'd be interested to know Netflix's internal discussions of this company.

[Drew]

I personally love Redbox, and i love that you get a FREE rental on Mondays.

[Sdoug]

The problem with Redbox is waiting 10 minutes to return a movie, while the idiot in front of you is totally baffled at how such a “complex” machine works…….I wish you could just stick a movie in a “return” slot even if someone else is trying to figure out how to use Redbox.

[a]

Sdoug is a real idiot. So you wait 10 minutes. Big _uckin deal.