Company Snapshot: Redbox Automated Retail, LLC
Total Annual Sales:
J. Scott Di Valerio- President (Interim-Redbox), CEO (Outerwall)
When Redbox issued its most recent third quarter financials, they painted an enticing picture. In terms of rental activity from their ubiquitous kiosks, offering movie and video game rentals, their quarterly numbers were record breaking. This surge was most impressive considering the increasing popularity of competing video streaming services, a la Netflix and Amazon. This news was announced in late October.
Fast forward to December 10 when Redbox parent company Outerwall (formerly Coinstar), issued a group of cautionary statements regarding the fortunes of the parent. It was announced that Outerwall was abandoning several highly promoted projects.
These included the discontinuation of three relatively new concepts including Rubi coffee kiosks, which was set to serve Starbucks Corp’s Seattle’s Best Coffee. The expectation was that around 500 of these kiosks would have been in operation early this year.
The Redbox parent also announced it will be eliminating over 250 jobs as a cost cutting measure. The company expects this to result in an annual savings of $22 million beginning in 2014.
Major Redbox news was almost hidden within the announcement. It was simply stated that Anne Saunders, who had been hired as the president of Redbox last year, has left the company. No reason for the departure was given. Until a permanent replacement is found, Outerwall CEO J. Scott Di Valerio will oversee Redbox operations.
In other Redbox news, to the surprise of some observers and investors, Redbox Instant remains alive. This is the video streaming service which teams Redbox with Verizon. The services terms offer four monthly DVDs from Redbox kiosks along with unlimited streaming for the price of a monthly Netflix subscription at $8. Streaming alone costs just $6. The service however has been slow to take off as the Redbox library is about a third the size of that of Netflix, the Redbox/Verizon service lacks many popular titles and increasing numbers of consumers who demand a streaming service no longer want to hear about physical DVDs.
Outerwall, after completing its third quarter trimmed its financial targets for the full year. While the total number of Redbox rentals was strong, total sales figures didn’t meet expectations as numerous promotions significantly cut into revenues.
This year, Chain Store Guide celebrates its 80th anniversary. In honor of this occasion, we are hosting a monthly series of editorials called “Chain Store Guide Through The Ages”, starting with the 1930s. We will take a look at what was happening in that time and how it affected the industries we now serve. Our Company Snapshots will examine companies from that period and see where they are today.
*Image courtesy of: IlliniGradResearch via Wikimedia Commons