If you thought that Redbox, with its ubiquitous red DVD kiosks, was going to make hay once Netflix changed its pricing structure, the answer would be … no. Although the company did fine in terms of forecasts, those forecasts were made prior full evidence of the effect of Netflix’s FUBARs was known, and that added up to disappointment for investors.
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Parent company Coinstar reported revenues on Thursday just slightly above Wall Street consensus estimates, with Q3 2011 revenue of $465.6 million vs. analysts’ forecasts of $462 million. Since it was also slightly above the midpoint of Coinstar’s own estimate of $450 to $470 million, it was all good, right?
That would be true, except that investors had expected something of a jump in those numbers, what with Netflix’s changes. Its own forecast was made in mid-July, just as Netflix announced its changes, and long before the ramifications … subscriber discontent and 800,000 defections … were known.
With that known, there had been hopes that Coinstar (CSTR) might see more pop to its results. Alas, it was not to be so, and that, combined with the fact that Coinstar announced it was going to raise prices $0.20 on basic DVD rentals sent the stock reeling in after hours trading. Coinstar was down to $47.68, -$5.27 or -9.95 percent at the time of this writing.
While $0.20 sounds like very little, considering the price rises from $1.00 to $1.20, it’s a 20 percent increase. Coinstar announced the price increase in the same press release which announced its Q3 2011 results. The company said,
“This marks the first price increase for a redbox standard definition DVD rental in eight years. The change is primarily due to the increase in operating expenses, including the recent increase in debit card interchange fees as a result of the Durbin Amendment.”
Ah, yes, blame it on politicians.
The company will keep the price of Blu-ray and game disc rentals at their current rates, or at at $1.50 and $2.00 a night, respectively.
The rate increase goes into effect on Monday, Oct. 31, hardly a treat for Halloween.