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Analyst: Kiosk/Mail Rental Strong Despite Window

Recent 28-day delays on new release titles imposed upon Netflix and Redbox kiosks appear not to have a detrimental impact on tent-pole movie rental turns, an analyst said.

Eric Wold, analyst with Merriman Curhan Ford in New York, said embargoes mandated by Warner Home Video, 20th Century Fox Home Entertainment and Universal Studios Home Entertainment might not have the desired chilling effect on lower margin $1-per-day and by-mail DVD rentals.

Wold, who cited The Blind Side as the first major box office title impacted by the delay, said the Warner title ranked 1st on the Rentrak weekly chart (ended April 25) when it became available on Redbox and Netflix after ranking 5th and 3rd the previous two weeks.

“We believe this is a positive indicator that demand for The Blind Side remained strong and consumers (for the most part) were willing to wait the 28 days until it was available in the two channels that provide both lower price points and greater convenience,” Wold wrote in a note.

The analyst, who covers Redbox and Netflix, said investors of Redbox parent, Coinstar, had become concerned about the potential negative impact on DVD rental demand by the shipment delay.

Wold said that despite some fallout regarding Netflix “caving to the studios” (as one pundit described it), the windows agreed to by the online DVD rental pioneer with the three studios are unlikely to lead subscribers to cancel their memberships.

Redbox customers, however, had been deemed a wildcard demographic by analysts as each rental transaction is an often impulse standalone decision and not based on a monthly subscription.

“We believe customers are more likely to remain loyal to Redbox and choose replacement DVDs during the window in order to avoid the video store or VOD for rental fees that are at least four-to-five times Redbox’s single day rental rate,” he said.

Source: http://www.homemediamagazine.com/financial/analyst-kioskmail-rental-strong-despite-window-19308

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