DVD rental kiosks could hurt Hollywood

The Los Angeles Economic Development Corp (LAEDC) has released a new report indicating $1 per day DVD rental kiosks could cost the movie industry up to $2.2 billion in lost revenue due to the popularity of the services.

“There is a high probability of losses in excess of $1 billion,” according to the report.  LAEDC targets Redbox exclusively and neglects mentioning Blockbuster as well as other kiosk rental firms, likely due to Redbox leading the rental kiosk industry. Redbox has also had high-profile court battles with several movie studios.

In addition to lost revenue, according to the report, around 9,200 jobs also are at stake if rental kiosks continue to gain popularity.

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“Redbox is an engine for industry growth, increasing consumer interest in film and providing new revenue streams to studios,” said Redbox President Mitch Lowe, in a statement.  ““In fact research shows Redbox will reinvest 50% of our revenue back into the studios providing revenue to market new titles and support new production. We’d prefer to work with the LAEDC to help them to understand Redbox, create factual models based on objective, credible data and to provide insight on the benefit Redbox has on the industry and on their community.”

Despite Redbox’s position as the No. 1 rental kiosk service, it must defend itself from several disgruntled movie studios and reports similar to the one LAEDC has issued.  Redbox cannot be slowed though, as it continues to test monthly subscription models and $1 Blu-ray movie rentals. The kiosk giant also hopes to begin offering video game rentals in the future.

I still believe that trying to blame rental kiosks for declining revenues is just an excuse Hollywood executives are throwing out as they are unable to convince consumers to purchase more DVDs and Blu-ray titles.  Redbox has filled a void in consumer entertainment — with consumers responding well to the service — and it’s up to the movie studios to create methods to keep consumers interested.