Redbox Raises DVD Rental by 20 Percent

October 28 00:00 2011

New York, October 28 (RainbowNewsLine.com) – Notwithstanding the severe loss of subscribers suffered by Netflix when it raised its rentals, Redbox’s owner, Coinstar has raised its prices for renting DVDs by 20 percent beginning Monday. On Thursday, the company in its latest quarterly report had reported that its earnings had nearly doubled, fuelled by its strong performance at Redbox’s more than 34,000 rental kiosks. But its decision to raise rentals has upstaged its good performance.

The company has raised its rental rate per day from $1 to $1.20 but rental of Blu-ray discs will remain unchanged at $1.50 per day and video games at $2 per day. Although Redbox’s increase is much milder than the 60 percent rise announced by Netflix last month, but it irritated investors, especially because Redbox had been picking up the disgruntled subscribers of Netflix. As a result, Coinstar’s shares plunged 10 percent in Thursday’s extended trading.

However Redbox, after testing the price increases in several cities to check change in rental patterns, concluded that there would only be a slight drop in DVD rentals. Coinstar CEO Paul Davis in a Thursday interview with The Associated Press said, “We didn’t take this lightly.”

Coinstar Inc. earned $37.1 million, or $1.18 per share, in the three months that ended in September as compared to $19.5 million, or 60 cents per share, at the same time last year. Coinstar’s shares fell $5.30 to $47.65 in extended trading.

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