Kiosk operator Redbox rented a record number of discs during its third quarter, which more than doubled profits for parent company Outerwall.
The company generated $587.4 million in revenue during the three-month period, up 7%, with profits coming in at $82.7 million, compared to last year’s $36.8 million.
Studios tend to keep a close eye on Redbox’s performance as the company’s success has been attributed to the downfall of the once formidable Blockbuster and the majors look for ways to convert renters into buyers of discs and digital releases.
Redbox’s bottomline is often hit by the costs to stock DVDs, Blu-rays and videogames and the popularity of the titles. Company is spending more for films due to an agreement with Warner Bros. Home Entertainment, inked during its fourth quarter last year.
Redbox said it rented 199.5 million discs during the quarter, more than any quarter in the company’s history. That’s a 13% increase over the same year-ago period.
“While heightened promotional activity had positively influenced traffic at Redbox through July and into August, we identified pressure on revenue from the level of promotional discounts and higher than expected single-night rentals, and recalibrated our marketing strategies to improve bottom-line performance,” said Outerwall CEO J. Scott Di Valerio.
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Blu-rays accounted for 15% of the company’s revenue during the quarter, up 61% from last year, with “Olympus Has Fallen,” “Identity Thief,” “G.I. Joe: Retaliation” and “World War Z” as the most popular pics on the format during the period, all moving more than 1 million units.
“World War Z” was the first Blu-ray title to reach the 1 million mark in its first two weeks for the company.
Overall, the company generated $2.46 on average per rental, down from $2.52 during the third quarter in 2012, although rentals at kiosks rose 2.1%.
Video game rentals accounted for 4.4% of revenue, repping 1.9% of rentals during the quarter.
Although it didn’t provide number, streaming service Redbox Instant by Verizon saw gains, and expects to continue to growth through new distribution deals like appearing on Sony’s PlayStation 3 videogame console this month and next month’s release of the PlayStation 4.
Shares in Outwerall rose $0.26 to close at $61.98 on Thursday.