Streaming music has become Warner Music's biggest business

Another milestone in the music industry’s shift to streaming: Revenue from the streaming business has become Warner Music Group’s biggest business.

The company announced that money from services like Spotify and Apple Music was the single biggest source of recorded music revenue in the first quarter of the year, surpassing both physical sales and sales of digital downloads. That’s the first time any of the big music labels has hit that inflection point.

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Netflix puts Redbox on Blockbuster’s road to destruction

Redbox hoped a greater focus on video games would help in its competition for streaming services, but struggles continue.

Outerwall Inc. fell 22% early Tuesday, trading at its lowest level in more than two years, after Monday’s disclosure of problems at its Redbox unit — yet another physical business under assault by digital streaming.

A disappointing revenue outlook for Redbox, whose red vending machines offer DVD rentals starting at $1.50 a day, shows that new movie titles and the addition of more videogames have not been enough to stave off the challenge posed by streaming rivals such as Netflix Inc. which also still rents out physical DVDs by mail. Outerwall, formerly known as Coinstar, said that Mark Horak, the president of Redbox, will be stepping down and replaced on an interim basis by Erik Prusch, Outerwall’s chief executive.

But changes at the top likely won’t save a business that increasingly appears old-fashioned in the era of streaming video. Outerwall described Redbox’s third-quarter results as “the worst theatrical box office in Redbox kiosks in four years,” and the revenue cut for the current quarter shows that plans to counter the downfall are not bearing fruit.

“We are investing in broader and deeper movie content to get customers back to the kiosk,” Prusch told investors in late October, adding that the company would make more investments in content, including expanding in video game content.

Blockbuster Video also hoped that games and wide content offerings would help it fend off Netflix, but the once-dominant chain eventually failed in its quest.

And after much discussion in the most recent conference call — including an analyst asking whether the company had evidence of more demand for videogames at its kiosks, to which Outerwall executives responded affirmatively — the company’s push into games did not merit a mention in its news release Monday. A company spokesman declined to comment beyond the official announcement.

Outerwall’s attempts to diversify also hit a wall. The company plans to shutter its Sampleit kiosks, where consumers can buy sample sizes of a range of skin-care, hair, fragrance and household products for $1, receiving a coupon toward a full-size item. It will start winding down the business in January and take a one-time, noncash charge for accelerated depreciation of $4.5 million.

Outerwall, based in Bellevue, Wash., still touts the Redbox business as “a compelling, valuable entertainment option as the largest movie transaction service in America.” But it looks as if even cutting out the costs of staff and large retail space from Blockbuster’s business plan cannot save large-scale movie-rental businesses from the likes of Netflix and its streaming ilk.

 

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