BELLEVUE, WA -- Coinstar's third-quarter profit fell 1%, as fewer new DVD releases and competition for viewers from the summer Olympics slowed demand for movie rentals from its Redbox kiosks.
Coinstar said net income slipped to $36.8 million, or $1.14 a share, in the three months ended Sept. 30. That compares with net income of $37.1 million, or $1.18 per share, a year earlier.
Revenue climbed 16% to $537.6 million from $465.6 million a year earlier. Net income fell 1% to $36.8 million, or $1.14 a share, from $37.1 million, or $1.18, a year earlier.
The Redbox segment still generated most of Coinstar's revenue in the quarter. Revenue from the DVD-rental machines grew nearly 18% to $459.5 million, primarily due to higher prices and the addition of more kiosks since last year's third quarter.
"The new release schedule, including fewer titles and several weeks with little new content, and record-setting Olympics viewership took a large number of movie viewers out of the home entertainment market," said Coinstar chief financial officer J. Scott Di Valerio. "We expect to improve performance in the fourth quarter and to finish the year in a strong position moving into 2013."
The company disclosed that it has inked a new, multiyear pact with Warner Bros. Home Entertainment that will bring the movie studio's titles to Redbox kiosks 28 days after their retail release. Coinstar previously had no agreement with Warner and purchased titles from retailers to stock its machines.
Meanwhile, revenue from Coinstar's self-service coin-counting/exchange machines rose 2.8% to $77.6 million in the third quarter.
The company has also been diversifying its automated vending business to reduce dependence on movie rentals. In June, Coinstar announced plans to launch its Rubi Coffee kiosk, featuring Starbucks' Seattle's Best Coffee. The company said it expects to roll out about 500 kiosks by the end of the year. | SEE STORY
Coinstar's full-year earnings and revenue outlook fall short of Wall Street's expectations. For the full 2012, Coinstar expects adjusted earnings per share will range from $4.50 to $4.65 and revenues will range from $2.19 billion and $2.24 billion. Analysts have forecast $4.91 per share on $2.26 billion in revenue for the year.