Redbox talks to studios 'daily' about distribution
By Danny King -- Video Business,10/06/2009
OCT. 6 | PHYSICAL: Redbox, which has sued three movie studios over delayed DVD distribution windows to the largest U.S. movie rental kiosk operator, is in "daily" negotiations with studios in an attempt to reach a distribution agreement as the studios attempt to get the lawsuits dismissed, said Paul Davis, CEO of Redbox parent Coinstar, at a New York investors conference today.
Redbox also will continue to roll out variable pricing for items such as Blu-ray discs and videogames, according to Davis.
"It really gets down to price points and/or [distribution] windows," Davis said at the William Blair & Company Emerging Growth Stock Conference today. "We're trying to figure out a win-win situation. Both sides have to figure out a way to give a little."
Redbox has lawsuits against Warner Home Video, 20th Century Fox and Universal Studios Home Entertainment, all of which are have taken issue with Redbox's $1 a night rentals and are prohibiting the sale of their new DVD releases to kiosk operators such as Redbox until at least four weeks after their street date.
Davis estimated today that the three studios represent about 40% of Redbox's supply chain, which is consistent with Rentrak estimates of studios’ rental market share for the first half of the year.
Both Warner and Fox last week asked to have the lawsuits dismissed, with Fox painting Redbox in court papers as unwilling to pay the same amount paid by other retailers for the studio’s movies. Fox said in last week's court filing that it attempted to negotiate an agreement for direct distribution to Redbox, "but after months of negotiations, the parties could not agree on price."
Warner argued in court papers last week that its four-week release delay is a normal part of business operations and does not break any laws.
Redbox, which Davis estimates as having about 10% of the U.S. rental market share in dollars and 15% in units, is installing software in some machines that allow for variable pricing for items such as Blu-ray discs and videogames, which are being tested in Reno, Nev., and Wilmington, N.C. Davis added that Redbox will test a subscription model at some of its machines, though declined to elaborate.
With reporting by Susanne Ault
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| Submitted by: | doug Gordon (doug@edgevideo.net) 11/2/2009 11:32:58 AM PT |
| Location: | Maine |
| Occupation: | indie store owner |
I think the best solution is for the studios to sell the new releases to
redbox on VHS only! Think about it everybody wins!
RB could install auto rewinders in the boxes and charge the customer
another dollar if the tape isn't rewound!
| Submitted by: | Joey 10/8/2009 12:11:40 PM PT |
this is a bunch of crap. The only reason this guy is saying that they are in daily conversations with the studios is because this is at an investors meeting. What wlse is he going to say he's trying to reassure investors that all is well.
| Submitted by: | RH 10/7/2009 6:27:37 PM PT |
| Location: | Cburg, VA |
| Occupation: | Rental Store Manager |
Firstly, I agree with you, but I believe that the issue isn't necessarily with the pricing but rather the 28-day window that the studio's are trying to enforce upon Redbox and other kiosks. The studios have an issue with Redbox's cheap pricing not the other way around.
| Submitted by: | Jerry Briggs (jerry@psci.net) 10/7/2009 2:35:57 PM PT |
| Location: | Tell City, IN |
| Occupation: | Video Store Owner |
WOW!
For once, I must agree with the studios on this matter.
I am a video retail store, renting DVD's, and paying the same price as my "brick and mortar" competition is, roughly.
While Redbox and their spawned competitors are proliferating, their $1 a night business plan is just not feasible for long-term profit, and certainly not in the short term.
What they are asking is for a break in pricing, since they are renting so low.
Isn't the pricing they have their own choice? Why sue the studios. Why not trot into the very stores they have their kiosks, and purchase at full price, as I have done, the week's latest movies?
Just where do they get the idea they are special?
If a Chevrolet dealer started selling new cars for $9500, he would be inundated, and celebrated as the new success story in the auto industry. People would flock to take advantage of his prices.
However, $9500 Chevys, just like $1 rentals, cannot be sustained. After all the other dealers went out of business, the Chevy dealer would suddenly decry GM's refusal to sell him cars for $8500 to facilitate his great idea. Perhaps he'd sue them.
I hate the old saw about "level playing field" but this is the case, and I hope the studios hold out and win their lawsuits. I believe they have a right to determine the pricing on their product. The kiosks should have it the same day and date as the rest of us do...but at the same price we pay. Fair is fair, and their efforts show the same economic faulty thinking that seems to be driving our whole country today.
If their idea is good, may they do well....and if they can't stand the prices the rest of us pay...then it may not be a superb idea, after all....
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