Only a month after Netflix announced it was giving into Warner Bros. and delaying new releases, DVD rental kiosk company Redbox has decided to do the same. Warner announced Tuesday that it had entered into a "multi-year distribution agreement" with Redbox that will allow Redbox to officially carry Warner's DVD and Blu-ray offerings—28 days after they are released to the retail market. The agreement will be the end of the lawsuit between the two companies—and marks a short-term victory in Warner's attempts to prop up the dying DVD market. The numbers don't lie: the market for new DVDs has been falling for years now, with the latest data showing that disc sales dropped by a full 13 percent in the US between 2008 and 2009 alone.
Warner made no secret of the reason for the move. "The 28-day window enables us to get the most from the sales potential of our titles and maximize VOD usage," Warner Bros. Home Entertainment Group president Kevin Tsujihara said in a statement.
Redbox started out by acquiring its major DVD releases from wholesalers that sell to all manner of retail outlets (Target, Walmart, etc.). To them, Redbox was just another buyer looking to acquire product, and Redbox did not have direct relationships with any of the studios (save Sony).
The studios came to despise Redbox for its business model, however. The company's kiosks, which house more than 600 DVDs at a time, rent out movies for $1 per day and sell used movies for $7. Redbox's Web-based inventory system makes it possible for consumers to select their movies over the Internet and reserve them in advance at a specified Redbox kiosk.
Ultimately, some of the studios were able to persuade wholesalers to stop selling movies to Redbox. The DVD-rental outlet got around that limitation by sending staffers out to Target, Walmart, and other retailers armed with corporate credit cards. The staffers would snap up new releases to be loaded into the ubiquitous kiosks.
Redbox's determination to stock and rent new releases, according to the major studios, was both an insult and the equivalent of stealing money straight out of their children's mouths. "Having our [movies] rented at $1 in the rental window is grossly undervaluing our products," News Corp. said when it decided to sue Redbox over its rental kiosks. Universal also sued Redbox, and Redbox sued everyone back, including Warner Bros.
The latest deal, however, means that the lawsuit against Warner is over and Redbox will have easier access to the studio's offerings. "This agreement enables redbox to fulfill our commitment to providing consumers affordable and convenient home entertainment," Redbox president Mitch Lowe said in a statement, probably while nursing his wounds. "By agreeing to a delayed release date, Redbox can now acquire Warner Home Video titles at a reduced product cost, preserving value for our consumers and increasing customer access to Warner titles at redbox locations nationwide."
This deal, at least from a consumer perspective, is nearly identical to one that Warner entered into with DVD rental and streaming house Netflix in January. Again, the companies cheerfully claimed that the agreement would mean easier access to Warner Bros. movies, as long as Netflix wouldn't let a single one out of its grasp until 28 days had passed from the time the DVDs hit the market.
Warner's deals with both Netflix and Redbox show the industry's commitment to doing everything it can to keep a slowly-dying media form alive as long as possible. A large part of that fight has been to cripple rental availability, whether through Netflix, Redbox, or others. It's a victory for the studios—and a loss for consumers. The only way this will pay off is if sufficient numbers of movie fans decide they absolutely can't wait an additional four weeks to rent the Hollywood blockbusters they missed in the theater and snap up the new DVDs.
