Coinstar, owners of the Redbox DVD rental service announced on Thursday that profits have nearly doubled for their movie rental business which now operates more than 34,0000 kiosks. Yet despite those growing profits the company is expected to push up the cost of renting movies.
According to the company the cost of a regular DVD will jump from $1 to $1.20 while the cost of their Blu-ray discs and video games will remain at $1.50 and $2.00 respectively.
The move comes after the company has witnessed increased demand for their service while competitor Netflix reported a loss of 800,000 customers following their own price increases which saw customers paying up to 60% more for their services.
Upon news of the price hike Coinstar, Inc. shares were down 10 percent. The damage could have been worse however Redbox DVD rental prices in several cities were hiked over the last several months and unlike Netflix the company realized that their was only a very slight dropoff in overall rentals.
The slight increase in cost for Redbox movies will help offset the slightly higher cost of obtaining DVDs and the charge for processing debit card transactions.
According to Coinstar they earned $37.1 million ($1.18 per share) in Q3 2011, that’s a 60 percent increase over the same 2010 period when they earned $19.5 million. The company also saw revenue raise by 22 percent to $466 million.
In increasingly good news for the kiosk rental business their U.S. market share climbed to 35 percent compared to Netflix which controls 33 percent of the market, the first time Redbox has surpassed their DVD-by-mail competitor.
Are you angered by the 20% increase in DVD rental prices from Redbox?