DVD purchase delay to hurt 40% of kiosk rentals

Analysts now believe Wal-Mart and Target DVD purchase limitations will directly impact 40% of all rental kiosk movies offered, as Hollywood studios and retailers look to gain additional time to sell DVDs before they become available for rental at $1 per day.

“From time to time, we have placed purchase limits on products at stores so that they can be accessible and available to as many customers as possible,” said Melissa O’Brien, Wal-Mart spokesperson, in a statement to media.

Wal-Mart didn’t specify if the deal also covered new Blu-ray movie releases. Blu-ray movies are available at some rental kiosks, but DVD rentals remain the most profitable business model.

redbox

Retailers must now serve as a middle-ground between Hollywood and consumers looking to receive content as quickly and as cheaply as possible.  Earlier in the month, Warner Home Video struck a deal with Netflix to implement a 28-day delay on renting out new release DVD’s and other Hollywood studios may be interested in a similar agreement.

It’s no surprise that Redbox is now being pressured even more by Hollywood, as movie studios have had gripes about the number 1 kiosk rental service, blaming the company for declining revenue and dropping DVD sales.

“We remain confident that the normal maturation of the installed Redbox kiosk base (with ramping revenues and margins) will help offset any potential impacts from the workaround programs,” Eric Wold, Merriman Curhan Ford analyst, said in a recent analyst note.

There are still many issues that must be resolved between Redbox, distributors, Hollywood studios and now retailers.  Redbox remains locked in legal battles with some studios, even while it has formed agreements with others for purchasing titles directly from the studio.