Mitch Lowe has resigned his post as prexy of discount DVD distrib Redbox, a division of Coinstar.
Lowe had been with the company since 2003 and steered its growth from a handful of kiosks at McDonald’s locations to more than 31,000 locations nationwide.
Exit comes as Redbox rival Blockbuster stated its intent Thursday to keep more than 1,500 stores open around the country, or 90% of the chain that was to have been liquidated. Those closures would have surely boosted Redbox.
Coinstar said it would begin a search for a new prexy, with Lowe staying on until his replacement is found. He is leaving to pursue “enterpreneurial and other interests,” but didn’t specify his next move.
“I feel very fortunate to have been part of the extraordinary Redbox team that transformed the DVD rental business, and I look forward to working closely with the company to ensure a smooth transition in the days ahead,” Lowe said.
The news of Lowe’s departure sent Coinstar stock down 9% in after-hours trading Thursday, after closing at $58.63.
While Lowe’s departure was unexpected within the industry, the succession will be crucial even as Redbox is coming off a healthy first quarter with earnings that topped the company’s own forecasts.
While Redbox commands about one-third of market share for disc rentals, the business is in decline as video-streaming options grow. Redbox has yet to articulate what its digital strategy is beyond expressing vague intent to enter that market, too.
Redbox is expected to benefit from Netflix’s announcement last week that it would raise by 60% its price for subscribers who want to both rent by mail and stream content. Blockbuster pounced on the decision as well with a promotion targeting disgrunted Netflix subs, offering a free month to its “Total Access” package, including movies that didn’t require the 28-day delay Netflix has imposed on some of its releases.
Redbox also issued preliminary results for its second-quarter earnings, projecting about $434 million in revenue — slightly below analyst forecasts. The company also said its upcoming fourth quarter would be up above the previous three given the anticipated film and videogame rele expected introduction of videogame rentals.
Blockbuster, which was bought out of bankruptcy by Dish Network earlier this year, is expected to rescue as many as 15,000 jobs as it moves to keep as much of its brick-and-mortar footprint in place as it can.
“Unfortunately, despite our efforts to reach reasonable terms, some property owners have closed stores,” said Blockbuster president Michael Kelly. “However, we’ll continue to look for opportunities for physical distribution in these neighborhoods as we expand our in-store experience, unmatched for movies and family entertainment.”