Indie retailers take aim at Redbox
PHYSICAL: Campaign suggests kiosks hurt entertainment industry
By Susanne Ault -- Video Business, 9/4/2009
SEPT. 4 | PHYSICAL: As Redbox battles three of the major studios in court, a group of independent bricks-and-mortar video retailers is working on a campaign to convince consumers that the kiosk operator’s $1-a-night rentals are putting the entire entertainment industry at risk.
Meanwhile, a study released this week by SNL Kagan suggests that Redbox’s low prices could hurt the burgeoning video-on-demand segment as VOD companies would not be able to match the kiosks’ prices while maintaining profitability.
The Video Buyers Group, one of the main drivers for the indie retailer campaign, said its 1,700 mostly mom-and-pop member stores are struggling to compete with Redbox’s inexpensive rentals. VBG and an unspecified publications firm are reaching out to studios and guilds to secure their support and/or participation.
The campaign aim’s to show Redbox as hurting future film production because studios are generating less revenue due to the $1 rentals, as opposed to the $3 to $5 rentals or $15 to $20 DVD sales available at traditional retail outlets.
Print, online and TV ads will encourage the public to drop Redbox as a source for DVDs.
A spokesman for Redbox had no comment.
“Dollar rental kiosks are to the film industry as the Internet was to the music industry,” VBG president Ted Engen said. “That’s how bad this thing can get.”
Apart from VBG, no other businesses have formally signed onto the campaign, but there is indication of some studios being sympathetic to the group’s cause.
“One company can’t be allowed to artificially reduce the value and availability of movies,” said one studio source. “Redbox’s short-term gains will shortly wreak havoc on producers, writers, laborers and ultimately consumers who love a broad selection of movies. If you don’t work with Redbox on its terms, it sues.”
The kiosk operator has split the major studios. Warner Home Video, Universal Studios Home Entertainment and 20th Century Fox Home Entertainment have tried to impose a kiosk window at least 30 days after the general retail street date of their titles, and Redbox responded by suing the studios. Sony Pictures Home Entertainment, Lionsgate and Paramount Home Entertainment, however, have signed lucrative distribution deals with Redbox. Walt Disney Studios Home Entertainment has an agreement with the kiosk operator in regard to limiting used DVD sales.
