Hollywood's brewing war against Redbox

More studios are worried that kiosk rentals cut into their DVD sales.

By Kim Peterson Jun 7, 2012 2:35PM
Image: Watching television (© image100/Corbis)Should rental companies like Redbox be allowed to offer movies as soon as they come out on DVD?

Redbox thinks so. But Hollywood studios are in fits over the idea. And that friction is creating a war between Redbox and Disney (DIS).

Walt Disney Studios is refusing to sell any DVDs to Redbox, Netflix (NFLX) and other rental companies until 28 days after they go on sale, The Los Angeles Times reports. This is a change from past practice, in which Disney sold DVDs to Redbox the same day the discs hit stores.

Disney is clearly worried that it won't sell as many DVDs in that first month if people could rent them. "The switch indicates that the Burbank media giant has adopted the view held by Warner, Universal Pictures and 20th Century Fox that $1.20 per night rentals from Redbox cut into more profitable DVD sales and video-on-demand rentals," writes Ben Fritz of the Times.

So what did Redbox, owned by Coinstar (CSTR), do in response? It sent employees out to retail stores to buy "John Carter" and other DVDs. And then it added those DVDs to its rental kiosks. Redbox coyly says it's getting the movies through "alternative means."

"John Carter" came out in stores on June 5. Redbox says it will have the DVD for rent by June 12.

Redbox has been willing to work with Hollywood in the past. It holds off on Universal and the Newscorp-owned (NWS) 20th Century Fox movies for the first month because it eventually buys the DVDs from those studios at a big discount, Fritz reports.

But Redbox is less agreeable with Disney and Warner Bros., owned by Time Warner (TWX). It's buying Warner DVDs from the store after Warner asked it to wait a whopping 56 days to offer DVDs for sale.

Netflix, by the way, has been willing to play nice with Hollywood because it doesn't count on new releases for much of its business. Netflix emphasizes its streaming videos over disc rental, and it doesn't much care if customers can't rent "John Carter" for a month. At least, it doesn't care enough to do battle with Hollywood.

Redbox is developing its own streaming service with Verizon, estimated to cost around $6 per month. For more information on that service, see the following video.

Post continues below.
For now, Redbox's business model relies much more on new releases. It needs a current lineup for those spontaneous rentals at drugstores and convenience stores. It needs "John Carter" so much, in fact, that it's willing to sacrifice the discount it normally gets from the studios in order to have the movie early.

There isn't much that Hollywood can do in retaliation.

Deadline.com has an interesting discussion in the comments about this issue. Here's what some observers are saying:
  • "Studios should make the window reasonable so Redbox and others would volunteer to keep it, because in the end Redbox has every right to rent the DVDs when they become available to the public, if they’re willing to pay the same price."
  • "The real problem here is that Redbox isn’t revenue-sharing. They're basically like your buddy that buys a DVD and then loans it out to everyone. That disc finds itself in 4 or 5 different homes."
  • "Consumers that are going to buy are going to buy consumers that are going to rent are going to rent, and people that are going to steal on [BitTorrent] are going to do that, nothing is going to change."
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194Comments
Jun 7, 2012 2:48PM
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Disney, please tell me why you're waiting up until now to be filing lawsuits against DVD kiosk owners instead of laying down the gauntlet at video stores thirty years ago?  Could it be that your products are becoming increasingly shoddy and/or overpriced and ditto for the other companies, too?  Well, regardless of the reason, your actions prove to be very greedy and you've essentially closed the barn door after all of the horses have escaped.  Too little, too late, and too bad for you crybabies.
Jun 7, 2012 3:48PM
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Actually, back in the VHS rental days the studios would sell to the video stores first at an outrageous cost of about $70 per copy. Then about 60 days later mass merchants would have it available for sale for about $20. I know, I had a video store then.  The consumer liked it because it was a "try before you buy" situation. Studios loved it because they were maxing out the video stores. Agree with comment above that says,basically, a renter rents and a buyer buys. Personally, there are very few movies I would pay $20 to watch over and over.
Jun 7, 2012 3:29PM
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As far as I'm concerned, the studios are shooting themselves in the foot.  I will not buy a copy of a movie I haven't seen.  The prices at the theater are so outrageous, I won't go to the theater.  If I forget the movie by the time it gets to Redbox, I won't see it and therefore won't buy it (see statement number 1.)  If I do see the rental, and like it, I WILL buy it; It will soon disappear from Redbox to never be rented.  I do not use streaming as we need closed-captioning, and the new releases do not have it enabled in the streaming format.  Therefore I don't purchase as many movies as I could.
Jun 7, 2012 4:54PM
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I rent it and if I like it then I will BUY it. Why pay $15-20.00 on a movie you are not going to watch more than one time.
Jun 7, 2012 6:23PM
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What the real deal is who wants to see a movie today at $10.00 a ticket when it should be $5.00 or $6.00 a ticket, and a concession stand that sells candy and popcorn 10X's  what it costs at a supermarket. 

When people get it in their heads that they are paying people to act on a screen, no different  for a talent,  that is equivalent to a normal everyday job since they are working at the only profession as a job, These people act like prima donnas and believe that $5,000,000 movie or $25,000,000, a movie is just, when actors prior to the 2000's made maybe $1,000,000 a film, and the rest on a percentage or royalties. It is absolutely ridiculous to go to the theater nowadays to spend $30.00 on 2 tickets and a 2 drinks, and popcorn and candy, and that is without children.  With children bump that up to $45.00. 

For $45.00 you could go to the store buy some hamburger buns, hamburger, sodas, candy, popcorn, and whatever else and rent a movie and enjoy it at home and get fed until you burst if that is what you want. 

At one time I liked going to the movies, but I sooner wait for it on the DVD, as that is much cheaper to do, than the alternative. We have people that can't even find jobs, or feed their families, or pay their bills, but these people that say they warrant $5,000,000 dollar salaries or more, and that goes into the sports arena as well, 

It disgust me at times, as they wouldn't be making that kind of money had those that run the business had the balls to force them to take a lower pay rate to make a film, or play for them and everything wouldn't be priced so outrageously high.

Ask yourself $25,000,000 for a movie were they sit on their **** 1/2 the day and then do their lines then go home and may take 3, 4 or more months to make, No different than someone doing their everyday job, or play a sport 9 innings, or 4 Qtrs., or whatever and goes home after the game or they go out to party whatever no different than a Executive after a good deal was made, or lost.

Prima donnas, they put their underware on the same as us, they put their socks on the way we do, they take baths like we do, the only thing that they do different is that they drive car's and have houses that those like us will never see in our lifetime, and for doing what a job that is no different than what we do everyday to keep our families fed, to keep the heat on, to keep the rent or mortgage paid, and maybe have a little left over to have a little fun. 

That's reality, the fantasy is the out of control salaries they are paid, and those people that go to the games, or go to the movies and pay the ticket price that ends up  to paying them.

 What's worse, 

That's insanity.


Jun 7, 2012 5:21PM
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Greed, Greed and more Greed!   So sick of this greedy Hollywood BS. Enough is enough. Lower the price of DVD's to an affordable price of $6.99 each for new releases and $1.99 for all others and huge profits will still be made.  I go to my local library and get DVD's for free for one week.  The library has new release too and my taxes already pay for my rentals.
Jun 7, 2012 4:16PM
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The studios don't get it.  If I don't want to buy a movie, I'm not going to buy it no matter how long I have to wait to see it.  I rarely watch movies more than twice so spending money to own it doesn't make sense.
Jun 8, 2012 1:14AM
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Middle America doesn't want to pay $10+ per person to see junk - that's why movie receipts are down.  What makes you think we want to spend $20 to purchase it?  Many of us don't need to see a movie as soon as it's released on DVD or to pay even $6 to watch it "On Demand".  If I spend $1.20 on Redbox and it's a dud movie, I'm only mad cuz I wasted time.  If I spend $6 on the same movie, I'm just slightly annoyed.  My days of paying $25 to see a movie (ticket & parking) are long gone.  Times have changed and the entertainment industry needs to get wise.  Maybe if you weren't paying non-talent millions of dollars to star in crap, you wouldn't need to gouge the consumer to make a buck.  The days of true talent and great movies seem to have long passed.
Jun 7, 2012 4:01PM
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Funny, we rent once or twice a week from Redbox and it is typically new releases. At the same time I buy movies but only after they've come down in price. For instance, I wanted a BluRay of a high profile movie that came out last year and it was only $15. You can be darned sure I'm getting the BluRay of this year's A title movie but again I will wait until it is under $20. I like being three doors down from the Jones'. Let the neighbors keep up, we will get there eventually.
Jun 7, 2012 3:15PM
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Still trying to rip off the client, well Disney you have met your match.
Jun 7, 2012 4:37PM
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Disney are idiots just like Warner Bros and Universal. So nobody went to see the bomb "John Carter", but Disney thinks people will shell out $20 to buy it to watch at home???? Can you believe it??? It's always the f****ng idiots who get the big Hollywood jobs!
Jun 7, 2012 3:52PM
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Jesse Long - You are right Disney quality movies are more like Summit films now Summit more like Disney.  Summit use to put out some stank B level A rated movies.  Now, with the help of the likes of Twilight and big stars on their payrolls, Summit is making a run for the tops.  Disney however, keeps piling on the poo with the rest of them, FOX especially.  How many different Ice Age movies must we make before we give up? How many times can Disney make the same crappy princess movies before someone catches on to the fact that it's the same garbage in a different dress and hair color? I mean come on.  I LOVE the good old fashioned Disney movies and so do my kids, but my kids won't even watch Disney movies, nor Disney Channel, because every movie and show is the same garbage.  Hollywood needed to let their ignorant, un-original, non-creative writers stay on strike a few years ago and hire all raw off the street talent.  I know 3rd graders who could write a better narrative and plot line that I won't be able to decipher better than any writer in Hollywood.  Give up the age old writing tactics and let's come up with an 18th plot lone basis PLEASE! And no, reality tv and documentaries are NOT plot line based, they are garbage too. Thanks!
Jun 7, 2012 6:40PM
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Then Hollywood cant figure out why people pirate movies.  You pay the over inflated prices to produce these movies, you pay the over inflated egos to star in these movies and then you try to bilk us for our last dime to see them.  I don't care anymore.   I will not pay to go to a show, i will wait til its on tv.  I am done renting and buying dvds.   I am not the only one who is feeling that way anymore.  Most people are getting to the point if you cant rent it for a dollar, why bother.
Jun 7, 2012 3:53PM
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Business is business, and it sounds like Redbox is gettin it done....  Shame the studios can't or just don't want to work with them....
Jun 7, 2012 6:39PM
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They should be thanking redbox for boosting their sales. Not to many people are going to buy a DVD they have not seen yet.
Jun 7, 2012 4:15PM
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How is it any different than Blockbuster? $1.20 vs. $5.00. That's how.
Jun 7, 2012 4:18PM
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I rather wait a couple days to rent.. I don;t care much to rent on the day a DVD comes out.. If i waited long enough for the DVD to come out.. i can wait a few more days for redbox to have it.. JUST Can't BEAT $1.20/night for a DVD I may not again watch after the first time... unless its a classic.. 
Jun 8, 2012 8:59AM
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I used to buy a lot of movies when my kids were young. I don't buy them now as they are all grown. There just aren't that many movies now that are worth watching more than one time, if that.

 

I'll wait 28 days to rent them, before I would buy one, that's for sure.

Jun 7, 2012 5:01PM
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My wife and i have a way of rent/buying. We prioritize what we believe we want to see. The highest we go see at the theaters.  The next we wait till it rents. In either case, if it is good, we buy and if not, we don't. Delaying the rental isn't going to influence us to buy.....In fact, it may just piss us off that the studios delay renting and we never rent or buy just to spit the greed bastards for messing with our system........
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