Redbox and Warner reached an agreement that prohibits the No. 1 rental kiosk operator from renting out Warner new releases for 28 days from the initial release date.
Leading up to this deal, Redbox has faced heavy criticism from several major movie studios.
Along with Warner last summer, 20th Century Fox and Universal Pictures requested Redbox provide a grace period allowing the studios additional time to sell newly released movies before they become available for rental. Redbox sued all three companies for unfairly telling them to stop renting new releases — but the legal case against Warner has now been dropped.
Warner reached a similar deal with Netflix early last month.
After Hollywood studios cut off the supply of new release titles to Redbox via their distributors, Redbox began buying DVDs from Walmart and other retailers. Even so, many kiosks didn’t have enough DVDs to meet demand. Unfortunately for Redbox, Walmart and Target now limit the amount of each new release title that can be purchased, which caused additional problems for the kiosk operator.
“We are very pleased to have had the opportunity to sit down with Redbox and negotiate an arrangement that benefits both parties and allows us to continue making our films available to Redbox customers,” said Kevin Tsujihara, Warner Home Entertainment Group President, in a statement. “The 28-day window enables us to get the most from the sales potential of our titles and maximize VOD usage.”
The rise in popularity of DVD rental kiosks has supposedly hurt DVD sales numbers, and a sluggish economy also has led consumers to leave behind DVD purchases.
I have long criticized Hollywood for its backwards, Draconian stance on peer-to-peer file-sharing, but I understand their argument a bit more regarding this issue. Potential viewers will be less likely to purchase or rent a movie using their cable or satellite service, as they could just rent a newly released movie on Redbox for $1 per night.
Movie rentals can cost as much as $4.99 per night for popular or new release titles through VOD, while viewers who have to go out to work or run errands can just stop by a store with a rental kiosk service and score a rental for just a buck.
As Redbox continues to work with Hollywood, the service also is looking at digital distribution, which could help it gain new revenue streams.