After announcing a multi-year deal with Warner Home Video to...

Warner had parted ways in January after Warner said it would require Redbox to adopt a 56-day rental window to renew the company’s distribution agreement. That left Redbox to patch together a workaround solution to secure Warner titles for its rental kiosks. Quoting figures from the Entertainment Merchants Association, Coinstar CEO Paul Davis touted the $18 billion home entertainment market where “physical media is dominant, with $4 of every $5 spent on physical content.” He reiterated Coinstar’s position that it believes in the long tail of the physical disc market, but the support for the shelf-life of physical discs was noticeably more optimistic on this latest call than in recent webcasts. Coinstar executives again provided few details about the Redbox Instant by Verizon joint venture that’s due to start this quarter. Trials have moved from alpha to internal beta testing, Davis said. He wasn’t clear on the breadth of the rollout that’s been promised before the end of the year. “We plan to expand that beta to the public,” he said. He wouldn’t specify the week when that would occur, saying only, “we're committed that it will be out before the end of the year.” The joint venture is “gaining great insights that will lead to a strong product offering,” Davis said. The “smart and efficient” acquisition strategy to buy content on a per-subscriber basis avoids a large capital outlay for content, he said. Content deals are negotiated separately with studios for the physical and digital distribution deals, Coinstar executives said, but the deal announced with Warner includes streaming through Redbox Instant by Verizon. The agreement will make Warner titles available in VOD and electronic sellthrough formats, allows Redbox Instant by Verizon to support and distribute Warner UltraViolet-enabled movies and covers a multi-year subscription video-on-demand agreement supporting feature-length content, the companies said. As part of that agreement, Redbox also plans to join the Digital Entertainment Content Ecosystem (DECE) and to promote its UltraViolet digital locker service, Coinstar said. Coinstar attributed its “challenging results” for Q3 to competition from the Olympics that “negatively impacted” all entertainment channels “with the exception of NBC,” including theaters, TV networks, video-on-demand services and physical disc sellthrough. The quarter included nine weeks with two or fewer titles in a time period “that historically is one of our highest rental periods,” the company said. A drop in rental frequency for the quarter was driven by “the low level of content over an extended period of time,” Davis said. Coinstar Q3 revenue grew 16 percent to $537.6 million over Q3 2011.