Stay on Top of Enterprise Technology Trends
Get updates impacting your industry from our GigaOm Research Community
While its longtime DVD-rental rival, Netflix (s NFLX) has signaled its eventual retreat from the disc business, kiosk operator Redbox seems more than happy to take on any physical-media customers Netflix wants to cut loose.
On Thursday, Redbox’s parent company, Coinstar, (s CSTR) reported a 34 percent uptick in revenue to $568.2 million during the first quarter, driven by 39 percent earnings growth of Redbox to $502.9 million.
In January, Netflix CEO Reed Hastings said his company would no longer invest resources into growing its DVD operation. The result of that posture may have emerged just three months later. On Monday, during its own first-quarter earnings report, Netflix revealed that it had lost over 1 million DVD/Blu-ray subscribers in the quarter and that disc-rental revenue had gone from accounting for 52.4 percent of total earnings in Q4 to just 45.4 percent in Q1.
Redbox, however, seems to have become the beneficiary of Netflix’s strategic moves regarding DVD/Blu-ray dating back to July, when Los Gatos, Calif.-based Netflix controversially upped prices on online disc rentals.
In an Oct. 12 research note reported on by Home Media Retailing, for example, Michael J. Olson, senior research analyst with Piper Jaffray, noted that web traffic to Redbox.com was up 46 percent year over year during September, when the price change took effect.
“Search trend data from Google supports a dramatic uptick in web activity surrounding Redbox as consumers look at alternatives to replace or supplement new-release movies from Netflix,” Olson wrote.