Why are some studios trying to pull new releases from Redbox DVD rental kiosks?
Fox and Universal Pull Cheap DVD Rentals From Redbox Posted on Wednesday, August 5th, 2009 by Peter Sciretta You’ve probably seen those DVD rental kiosks in your local Walmart, McDonald’s or supermarket. You might have even rented a movie for the very low price of $1 for one night from one of these machines. Easy quick and go rental seems like a very consumer friendly idea. So, of course, some of the major Hollywood studios are up in arms against it. Why are the studios so upset? The kiosks are apparently hurting their bottom line. The $1 rentals are supposedly hurting rental revenue and resales of used Redbox discs are hurting dvd sales. Universal was the first to strike, ordering their wholesalers to stop supplying dvd titles to Redbox within 45 days of release. Redbox fired back with a lawsuit in October. Universal counter-sued, and a decision is expected any day from a federal judge. And now 20th Century Fox is joining the war against Redbox, ordering wholesalers to stop supplying
Hollywood studios are split over Redbox, the $1-per-night DVD rental kiosk company: They could supply it with cheap wholesale discs and ride its massive growth, or starve it in the hopes of preserving higher-priced purchases. News Corp.’s 20th Century Fox fell on the side of starvation this week, joining General Electric Co.’s Universal Pictures, whose withholding of discs prompted a lawsuit. On the flip side, Sony Corp.’s movie division signed a five-year deal just last month to supply Redbox. As part of the deal, Redbox would get discs more cheaply but would have to destroy copies after their rental lives ended rather than sell them as “previously viewed” for $7 apiece, as it had done in the past. Many other studios are taking a wait-and-see approach. Although fans of the self-service vending machines won’t notice a difference, the approach is crucial to both Redbox and the studios. Lack of studio supply forces Redbox to buy discs from regular retailers — just like an individual migh
It’s no surprise that Hollywood isn’t exactly jumping for joy over the advent of discount-rental kiosks like Redbox. So it’s even less of a surprise that studios like Fox and Universal are taking action to limit the dollar-rental folks. The Hollywood Reporter explains that Fox has instructed wholesalers to hold back on supplying new DVD titles to Redbox until 30 days after release. This would theoretically minimize the damage Redbox might be doing to Fox’s rental profits and DVD sales. Redbox could fight back, however. Universal and Redbox are currently in litigation after Universal tried to impose a 45-day delay on the rental company last year. A Fox representative told THR that they’re prepared for a similar Redbox lawsuit to head their way. Sources: http://www.cinemablend.com/dvdnews/Redbox-Red-Faced-As-Fox-Delays-Its-New-Releases-19075.
