Strong Summer Movie Lineup Will Satisfy Moviegoers Now, Redbox Later
The following is an excerpt from a report compiled by Michael Pachter of Wedbush Securities.
Movie Rental Industry
Key Redbox releases this year (with domestic box office total in millions from www.boxofficemojo.com):
o 6/4: Mama ($72), Safe Haven ($71), Warm Bodies ($66), Escape from Planet Earth ($57).
o 6/11: OZ The Great and Powerful ($234), Hansel & Gretel: Witch Hunters ($56), Snitch ($43), Cloud Atlas ($27).
Key Redbox releases last year (with domestic box office total in millions from www.boxofficemojo.com):
o 6/5: none.
o 6/12: Journey 2: The Mysterious Island ($104), John Carter ($73), Ghost Rider: Spirit of Vengeance ($52), The Grey
($52), Tyler Perry’s Good Deeds ($35).
Over the next two weeks, there is one rental release that grossed over $50 million in domestic box office compared to three last year. DVD rentals for the upcoming two-week period should underperform the same period last year.
Redbox should benefit from a very strong summer release schedule. There are 22 films with budgets greater than $100 million scheduled this summer, compared to 15 last year and an average of 12 – 15 most years. There are going to be several films that people want to see, but the crowding of the release schedule will make it impractical for them to see all of the movies they care about in theaters. As a result, we believe that people are far more likely to rent the movies when released on DVD. The average time from theatrical release to DVD is under five months, and even for movies falling within the 28-day window “around half of Coinstar’s (NASDAQ:CSTR) supply”, DVDs are generally available within six months of release. That means that the majority of big-budget films will be available in Q3 or Q4 for Coinstar, and Coinstar’s guidance implies that they understand this. As a reminder, the high end of CSTR’s guidance calls for Redbox revenue growth from $1 billion in the first half to $1.2 billion in the second half.