The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
This biweekly newsletter lists key events in the movie rental and exhibition industries for the period between February 25 and March 10, including notable rental releases, box office figures, and recent company-specific news.
Movie Rental Industry
Key Redbox releases this year (with domestic box office total in millions from www.boxofficemojo.com):
o 2/26: Silent Hill: Revelation ($18), The Master ($16).
o 3/5: Twilight Saga: Breaking Dawn Part II ($292), Wreck-It Ralph ($188), Playing for Keeps ($13).
o 2/28: Hugo ($74), Dream House ($21), The Thing ($17).
o 3/6: Jack and Jill ($74), Footloose ($52), Like Crazy ($3).
Over the next two weeks, there are four notable rental releases compared to five last year (notable releases are those that grossed over $50 million in domestic box office). Despite fewer notable releases this year, DVD rentals for the upcoming twoweek period should outperform the same period last year as this year’s releases grossed roughly 35% higher at the box office.
Coinstar’s (NASDAQ:CSTR) recent analyst day focused on growth, notwithstanding our belief that investors view the company as a business that is approaching maturity. For the most part, the presentation focused around growth opportunities in Redbox, Coinstar, and New Ventures. Redbox appears to have neared market saturation domestically, with only a few international expansion opportunities remaining before the business is fully mature. New Ventures has contributed losses the past several years, and Redbox Instant by Verizon has negatively impacted 2012 profitability and free cash flow; we believe investors would prefer continued viability of the company’s Redbox and Coinstar businesses before embarking on a chase for untested and potentially expensive growth opportunities. In total, management believes that revenue can grow from over $2 billion in 2012 to over $4 billion in 2017, representing 25% of the total automated retail sweet spot of ≈ $16 billion. Less than half of the revenue growth is expected to be from Coinstar’s core businesses, and the remainder from New Ventures.
Although Netflix (NASDAQ:NFLX) has announced a number of…