Durbin Amendment = Redbox Raises DVD Rentals To $1.20 A Night

UPDATE: Redbox To Unveil Streaming Plan As It Raises DVD Rentals To $1.20 A Night

CEO Paul Davis says the Redbox price increase to $1.20 a night followed “several months of testing” and was designed to keep prices “as low as possible for consumers” as operating costs rise. The company says that the “vast majority” of transactions at its kiosks involve debit cards affected by the Durbin Amendment, as opposed to credit cards. Customers will still be able to rent for $1 a night through November if they reserve a DVD online and then pick it up at a kiosk. He added that the company plans to unveil a digital streaming plan by year’s end, calling it “a top priority for the company.” Davis says Redbox has seen business increase from consumers who felt “disenfranchised” by Netflix’s 60% price hike for its combo DVD rental and streaming service, but he can’t say how many people defected.

On the studio side, Davis says Paramount just extended its agreement to provide DVDs to Redbox the same day they’re available in stores through 2014. The studio will receive 100,000 shares of restricted stock in Coinstar, and can collect an additional 100,000 shares if it exercises its two options that each would extend the agreement by a year. Redbox’s day-and-date agreement with Sony runs through September 2012, and one with Lionsgate goes through August 2014. It has similar deals with Summit and Anchor Bay.

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PREVIOUS, 1:28 PM: The announcement seems to have thrown investors for a loop, even though parent company Coinstar reported 3Q earnings well above expectations. Coinstar shares are down 12% in initial after-hours trading. The company said it had net earnings of $37.1M, up 90.3% vs the same period last year, on revenues of $465.6M, up 22.5%. Earnings from continuing operations at $1.18 a share handily beat the 88 cents Wall Street expected. “Our Redbox business alone passed $1B in revenue year to date and became the leading renter of DVDs by staying focused on delivering great value and convenience to our consumers,” CEO Paul Davis said.

http://www.deadline.com/2011/10/redbox-raises-dvd-rental-price-to-1-20-a-day-from-1/

Is that company deliberately trying to kill itself? Even at $1.20, Red Box is still a better deal than On Demand.