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CEO: Redbox Looking to Increase Kiosk Footprint as Daily DVD Rental Price Rises to $2.25

Redbox ended the most-recent fiscal period (ended Sept. 30) with 34,000 legacy kiosks renting DVD and Blu-ray Disc movies. While the brand further transitions to digital distribution, including transactional VOD and free ad-supported streaming television, it hasn’t turned a cold shoulder to packaged, according to William J. Rouhana Jr., CEO of parent company Chicken Soup for the Soul Entertainment.

Speaking on the Nov. 14 fiscal call, Rouhana said that major studio movies remain the key rental driver at Redbox kiosks — a reality that has been undermined since the pandemic began in early 2020. With limited high-profile theatrical releases over the past two years, Rouhana admitted frustration with the lack of marquee movie titles available to kiosks over the summer — a trend he thinks is changing.

“It won’t come as a surprise that the outsized theatrical hits…Paramount’s Top Gun: Maverick as it works its way through our distribution windows, will have an outsized impact on the number of [disc] rentals in our kiosks in the fourth quarter,” Rouhana said.

Indeed, Maverick remains Redbox’s top-grossing ($19.95) transactional VOD release in the platform’s brief history, while the average number of DVD rentals increased 25% largely due to the movie. At the same time, Redbox saw an average growth in disc rentals in October, a trend Rouhana said has continued into November following Maverick DVD release on Halloween.

The executive contends Redbox kiosks remain a viable business with the right retail partner. The company plans to add 1,000 kiosks with its most-profitable retail partner going forward. Redbox raised the nightly DVD movie rental fee from $1.99 to $2.25, effective Nov. 1. In the third fiscal quarter, ended Sept. 30, kiosk’s gross operating margin after product costs was 59%.

“We need consistent, big title movie releases to get back to historical [disc rental] levels,” Rouhana said. “That consistency, particularly if you look at exhibitor results, is not yet where we want it. However, it’s evident the industry is trending back in a positive direction with more studios recommitting to the theatrical window.”

While Rouhana doesn’t believe the kiosk rental business can return to pre-pandemic levels, he said he would be satisfied achieving 50% of Redbox’s 2019 disc rental revenue. Redbox is now the sole revenue source for studios when it comes to retail kiosk disc rentals, according to Rouhana. And with Netflix still generating about $35 million in legacy by-mail DVD rental revenue in its most-recent fiscal period, the distribution channel still has legs.

“You can’t underplay how important that is,” he said.

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