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US kiosk operator files for bankruptcy protection; overall market continues to expand

September 28, 2011

Small US video rental kiosk operator Public Media Works announced September 26 that it has voluntarily filed a petition for protection under Chapter 11 of the US Bankruptcy Code while it restructures its operations and seeks a debtor in possession loan. The company rolled out a small number of kiosks (25) in southern California in March with plans to follow up with a second series in May but was unable to secure financing to carry out that expansion.

A number of smaller kiosk hopefuls have jumped on the Redbox bandwagon over the past few years, with varying degrees of success. IHS Screen Digest currently projects US kiosk rental locations to reach 48,290 by year end and rentals to generate nearly $1.8bn in revenue. Coinstar's Redbox unit currently holds about 74% of locations and brings in around 88% of consumer spending on kiosk rentals.

Redbox, in its second-quarter financials filed July 28, reported $736m in kiosk revenue in the first half of 2011, up from $535m in the comparable period of 2010, with operating profit rising to $125m from $83.5m. Installations had reached 33,300, up from 30,200 at year-end 2010. Same-store sales increased by 16.6% in the second quarter, up from 15.3% - and a big recovery from the 12.5% of the fourth quarter of 2010.

Coinstar expects full-year 2010 revenue from kiosk rentals to top $1.5bn with between 5,000 and 6,000 net installations over the year. In August the company announced extensions of its content supply deals with Lionsgate and Sony, pushing the expirations of those out into 2014 (though Sony can opt out in 2012).

NCR, which operates Blockbuster Express branded video rental kiosks, is a much smaller player in the market and has grown much more slowly than originally anticipated. Nonetheless, its kiosk business continues to expand, with $75m in revenue in the first half of 2011 vs. $41m in the comparable period of 2010. It reported losses of $32m in that period vs. $22m in the year previous. It is unknown whether the company will be able to hold onto the Blockbuster Express brand post the acquisition of Blockbuster's assets by Dish Networks.

That company's recent acquisition, and apparent nascent revival, of Blockbuster has strengthened the shrinking traditional in-store rental business somewhat. Blockbuster recently introduced pricing on catalog and recent-release titles that is relatively competitive with that of kiosks and has been trumpeting its early access to product kept from kiosks by studios imposing a window. This may negatively impact the kiosk business in the future, though gains from low-volume consumers 'fleeing' the recent Netflix price hikes will likely offset those losses.   

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Related Data

Software video rental
All Data: Kiosk video rental revenues - 09 May 12


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