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How Much Longer Can Physical Media Hold On?

  +Follow July 30, 2013 8:56AM
Tickers Mentioned:

On July Outerwall Inc. ($OUTR), formerly Coinstar, Inc posted extremely disappointing earnings for the second quarter of 2013. . The shortfall wasn’t attributable to the namesake Coinstar change-to-cash machines, but rather the company’s DVD rental kiosk subsidiary, Redbox. First quarter earnings were even worse, with a 58 percent plunge in earnings. This crash coincided with the company’s name change, and a shift in focus away from physical media. Following the disappointing Q2 earnings report, the stock dropped over 13 percent.

The company is working on transitioning into other arenas, like kiosks that dispense coffee, but the sagging profits of their flagship Redbox business points to one undeniable trend: physical media is on its way out. Across the board, physical retailers are losing out to their digital counterparts.


Redbox provided a less costly alternative to traditional rental outlets like Blockbuster, but they still couldn’t claw their way to profitability. On the surface, it would seem the company is doing well, as their numbers rise while Netflix Inc's (NFLX) physical media division withers. While Netflix's DVD business dropped 475,00 subscribers to hit 7.1 million in Q2 2013, sales rose for Redbox, with a 4.1 percent uptick. But this couldn’t offset rapid expansion. Redbox found that people are checking out fewer moves from kiosks, and for a shorter amount of time, further driving down profits.

Netflix isn't batting an eye. Their streaming business tacked on 675,000 subscribers to hit 29.8 million total. As streaming now accounts for over four times as many subscribers than mail digital is their undeniable bread and butter now.


Borders went the way of the dodo in 2011. The remaining mega-bookstore Barnes and Noble Inc. (BKS) saw the writing on the wall and decided to try to get into the e-reader game. The move into hardware was a risky one, and it didn’t pay off: the company’s Nook has so far failed to take off.

While Nook was nowhere near as popular as Amazon’s (AMZN) Kindle, The big question is whether consumers really want an e-reader at all, when the preference for hardware favors tablets made by Samsung, Google Inc (GOOG) , and Apple Inc (AAPL) . And Barnes and Noble has practically zero chance of ever competing with those tech giants.

In Q2 2013 the company reported a net loss of $119 million, double the previous quarter.

Video Games

Video game seller GameStop Corp (GME) got some good news on June 20 when Microsoft  Corp (MSFT) announced they would relax rules for using previously owned games on the Xbox system. It was a capper on an uptick that had seen the company regains form. GameStop hit its high of 64.41 on December 17, 2007, and then crashed down to almost $21 a share by the end of 2008.

But since then, the retailer has exploded. It can’t be ignored that GameStop stock has surged this year, and is up a whopping 78.49 percent on the year. This can be attributed to two factors: one, Xbox’s backtracking on a previous commitment to curbing used-game sales and allowing freer trade of physical media; and the recession pushing more people into buying used games.

But despite the uptick, sales of physical media overall are dwindling for the company. The end of their 2012 fiscal year on January 2013 saw them report a drop in overall sales of 7 percent, while mobile and digital sales were up 21.2 percent.

The company cited a “tough video game market,” and had previously reported they were shuttering 200 stores.  


Perhaps no sector of physical media has gotten the press music has, as it was the first sector to experience significant online streaming and piracy. But Napster isn't what put Tower Records out of business; it was a general shift to digital that the physical music companies were too slow to pick up on. Again, Apple picked up the slack where physical retailers didn't, as their iTunes capitalized on the switch to digital.

Interestingly, some music retailers have been able to turn things around by profiting off one thing that definitely can't be transferred into digital: real estate. Trans World Entertainment (TWMC) , which owns the chain f.y.e, made a land deal in South Florida that netted the company a $22 million dollar profit. That same year, holiday sales dropped 17 percent from the year prior.

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Results for OUTR
Stocks Creamun
29 May 15 07:45:06
RT @adibmoti: Weren't $GME , $OUTR supposed to be dead years ago ?
John Huber
29 May 15 07:33:52
RT @adibmoti: Weren't $GME , $OUTR supposed to be dead years ago ?
Options Chris
29 May 15 06:46:37
I don't get pissed too often, but I'm out of my mind with these partial fills. Missed some serious coin because of them $SPLK $DATA $OUTR
US Banking News
29 May 15 06:24:44
Investment Analysts’ Weekly Ratings Changes for Outerwall $OUTR http://t.co/UDpiGngoBi
Ticker Report
29 May 15 06:11:36
Investment Analysts’ Weekly Ratings Changes for Outerwall $OUTR http://t.co/xVG5GEhdvO
Dakota Financial
29 May 15 06:09:35
Investment Analysts’ Weekly Ratings Changes for Outerwall $OUTR http://t.co/cYzzytjeG5
29 May 15 05:58:23
Insider Selling: Galen C. Smith Sells 4,112 Shares of Outerwall Stock $OUTR http://t.co/mCMmMcace5
29 May 15 05:53:06
$OUTR: Insider Selling: Galen C. Smith Sells 4112 Shares of Outerwall Stock ...: http://t.co/fPpV5bMHZC
29 May 15 04:47:02
$OUTR: Surging Earnings Estimates Signal Good News for Outerwall (OUTR): http://t.co/JLCadDU6eU
Adib Motiwala
28 May 15 18:58:19
Weren't $GME , $OUTR supposed to be dead years ago ?
The Legacy News
28 May 15 09:58:14
Insider Selling: Outerwall CFO Galen C. Smith Sells 4,112 Shares of Stock $OUTR http://t.co/DhHIHoxC3u
28 May 15 09:53:03
$OUTR: Insider Selling: Outerwall CFO Galen C. Smith Sells 4112 Shares of ...: http://t.co/1CZOjmfpd4
Ticker Report
28 May 15 04:56:53
Insider Selling: Galen C. Smith Sells 4,112 Shares of Outerwall Stock $OUTR http://t.co/dPTwPyRDBy
Dakota Financial
28 May 15 04:54:10
Insider Selling: Galen C. Smith Sells 4,112 Shares of Outerwall Stock $OUTR http://t.co/As6oD0Fe8x
28 May 15 01:48:04
$OUTR: Large Inflow of Money Witnessed in Outerwall Inc.: http://t.co/Zt2K8NZ0Fb
Fundamental Investor
27 May 15 20:59:39
@Find_Me_Value @BrattleStCap @ApexHurley - $OUTR price increase and future increases (pricing umbrella) not well understood IMHO.
Fundamental Investor
27 May 15 20:58:55
@Find_Me_Value @BrattleStCap @ApexHurley - $OUTR thesis - same thing @apexH was talking about re: IBM about a week ago. identical really.
27 May 15 19:08:42
@BrattleStCap I was encouraged to look at $OUTR after his recent letter, but just couldn't find myself to buying it due to biz decline
27 May 15 17:09:03
Triple-Play Miracle #Stocks For Your Portfolio $CALM $OUTR $ORBK http://t.co/TxUEuajhYM
27 May 15 14:58:05
$OUTR: Insider Selling at Outerwall Inc (OUTR) : Galen C Smith Sells 4112 ...: http://t.co/5C6ysB4BTM
27 May 15 14:36:31
Scan results - Slingshot Bullish today: $WDAY $PANW $PLAY $DANG $OUTR $VEEV $FTNT $MSCI $PPC $TSLA ... http://t.co/FcfHR07N2E
Large Void Bot
27 May 15 13:40:39
$OUTR May 26, CFO Sells 4112 (-225 Net) Shrs; Net: -105.23k; Acq'd: 4112 53.53/s; Disp'd: 4337 75.02/s
Insider Filings
27 May 15 13:34:25
$OUTR: Smith Galen C sold a net $105,226 in OUTERWALL INC. http://t.co/pSwb742D2G
27 May 15 13:34:02
$OUTR: New Insider Transaction on OUTR by Chief Financial Officer: http://t.co/K8F8D5pblS
Insider Alerts
27 May 15 13:33:07
NEW insider transaction on $OUTR reported a moment ago: http://t.co/lTVTDrwIkN
Quantified Alpha
27 May 15 11:40:03
Stocks we like in the consumer discretionary sector: $FRS $PTRY $SCVL $MCS $OMC $OUTR $SCHL $KSS $M $PENN http://t.co/Zpr4vgCFho
TalkMarkets Recap
27 May 15 11:09:04
Triple-Play Miracle #Stocks For Your Portfolio $CALM $OUTR $ORBK http://t.co/hKQTC0ahYP
Virendra singh
27 May 15 07:19:20
RT @amigobulls: $OUTR $CALM $ORBK Are these really Miracle stocks? http://t.co/NB5x1AdQ64
Breaking News
27 May 15 07:08:07
$OUTR: Are Tablets Falling Out of Favor?: http://t.co/gqsfgfcp9Y
27 May 15 06:26:53
$OUTR $CALM $ORBK Are these really Miracle stocks? http://t.co/NB5x1AdQ64
Bret Jensen
27 May 15 05:39:36
Triple-Play Miracle Stocks For Your Portfolio $CALM $OUTR $ORBK http://t.co/hwktfkCAnq
Julian Close
27 May 15 05:35:21
PriceWatch Alerts for $WPRT, $OUTR, $CALM, $OPK & $TWC from InvestorsObserver today: http://t.co/wvrN7r8BsS #OptionsTrading #CoveredCalls
Investors Observer
27 May 15 05:35:21
PriceWatch Alerts for $WPRT, $OUTR, $CALM, $OPK & $TWC from InvestorsObserver today: http://t.co/oD26SajBG0 #OptionsTrading #CoveredCalls
27 May 15 04:31:35
Triple-Play Miracle #Stocks For Your Portfolio $CALM $OUTR $ORBK http://t.co/TxUEuajhYM
Penny Stock Secret
27 May 15 01:06:20
Don't Wait Untill 2016 To Realize This POWERFUL Stock Alert Service! $240,000 GAINS! http://t.co/NovWYe2RAx .. $FAST $OUTR $EROC
Cyni Capital
26 May 15 16:42:52
RT @QuantifiedAlpha: My "Short Squeeze" Screen... High Short Interest + High 14-day RSI... $CONN $OUTR $JAKK $SRPT $HLF $EBIX http://t.co/w…
26 May 15 15:31:10
26 May 15 14:31:41
Scan results - New 52 Week High today: $TWC $TMUS $MOMO $LYV $CVC $CTRP $DE $OUTR $SAGE $RELY ... http://t.co/vfZ3ijeNOS
Breaking News
26 May 15 13:28:04
$OUTR: Notable Session Mover: Outerwall Inc. (NASDAQ:OUTR): http://t.co/drz4zBkLoT
Quantified Alpha
26 May 15 11:06:38
My "Short Squeeze" Screen... High Short Interest + High 14-day RSI... $CONN $OUTR $JAKK $SRPT $HLF $EBIX http://t.co/wcaIFc0dp8
Large Void Bot
26 May 15 10:00:28
Trader Daily
26 May 15 09:16:40
Insider Trading Alert - OUTR, DLX And ALOG Traded By Insiders $OUTR http://t.co/SrW8QevntO
Syed Waqas Nabi
26 May 15 08:00:50
A bullish Big MAC (Bullish) has occurred at 10:00 AM May 26 at $79.20 on Outerwall Inc (OUTR) $OUTR
Breaking News Now
26 May 15 01:41:02
$OUTR: Outerwall Inc (OUTR) Insider Selling : James Gaherity Sells 300 ...: http://t.co/3Pn1YiaBK4
25 May 15 01:02:08
Tickers trending on TWTR in last 1 hour $OUTR $CTL $ANGI $AMBA $KPTI http://t.co/O86TTIhTJi
25 May 15 00:47:07
TASR TASER Intl Inc. Stock Forum http://t.co/dEKNWdy7pb $TASR $NUGT $OUTR $DAL #TASR #share #nasdaq
Rosner Stocks
25 May 15 00:45:39
OUTR Pall Corp. Tick http://t.co/Cko7xb5pQl $OUTR $OUTR $WFC $CSL #OUTR #stocks #invest
25 May 15 00:45:36
OUTR Pall Corp. Prev Close http://t.co/nO6DL2yWRQ $OUTR $SWKS $STZ $OUTR #OUTR #share #stocks
IH News Desk
25 May 15 00:45:19
NOV Omnicare, Inc. Summary http://t.co/kID0ku2SHY $NOV $AMRN $OUTR $DXJ #NOV #share #invest
Investors Hangout
25 May 15 00:45:17
OUTR Pall Corp. Summary http://t.co/7XUHM8wMcd $OUTR $EGN $SAMP $AMT #OUTR #invest #tradeideas
  +Follow July 30, 2013 8:56AM



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