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Coinstar's strong Q1 results show there is still life in discs

If one goes by Redbox movie-rental kiosk parent Coinstar's quarterly results, the announcement of the death of the disc is premature. Fueled by strong rentals over the past two months, the Bellevue, Washington-based company now sees first-quarter revenues climbing 34% to at least $567 million. It revised its Q1 estimates on both earnings and revenue upwards. On average, analysts had expected Coinstar to generate revenues of $538.6 million.

A year ago, Daily Finance says, analysts were decidedly bearish on Coinstar's growth prospects, pointing out that its DVD-rental vending machines would become obsolete with the widespread adoption of streaming media, the primary platform of its main competitors Netflix, Amazon and Apple.

In addition, Coinstar was battling Universal Pictures and Fox over a decision to delay new DVD rentals by 28 days after its first retail discs were offered for sale. Analysts were quick to label Coinstar the 'next Blockbuster,' reminds Daily Finance.

Now, a year later, Coinstar is back on track, despite submitting to the demands of the two Hollywood studios. It raised rental prices during the quarter by 20%, with no noticeable impact on sales volume. The company's first quarter was also significantly boosted by lower credit card processing fees and the popularity of Puss in Boots, Moneyball and 50/50 at its 35,500 Redbox rental kiosks.

Redbox achieved an entertainment milestone in early March, crossing the two-billion mark for movie and game rentals.

Story filed 17.04.12

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