Redbox, making rental ‘convenient’. Again.
p2pnet news view | P2P | Movies:- When p2pnet tech guy surfer wrote, “Here is an easy (theoritical) tutorial on how to get your movies for $1,” going on, “Sorry this tutorial is only good where you can actually rent a DVD for $1,” and, “Go to a McDonalds that has a DVD rental kiosk out front,” you know what box he was talking about.
Redbox.
“Redbox began in 2002 using re-branded kiosks manufactured and operated by Silicon Valley-based DVDPlay at 140 McDonald’s restaurants in their Denver test market,” says the Wikipedia.
“The first DVD rental kiosks in the Washington DC accompanied the company’s unsuccessful attempt at automated convenience store kiosks. In May 2005, Redbox phased out the DVDPlay-manufactured machines and contracted Solectron â a subsidiary of Flextronics, which also manufactures the Zune, Xbox and Xbox 360 â to create and manufacture a custom kiosk design.”
Redbox.
There’s no question it’s of primary importance to people looking for an inexpensive movie fixes of one kind or another, but, “While the weak economy is without a doubt reinvigorating the rental biz at the expense of DVD sales, we are increasingly concerned that the rise of Redbox (and Netflix) is making rental ‘convenient’ again, which could lead to a meaningful, long-term reversal in consumer behavior,” 
says Pali Research.
“While there is also a collectability aspect to DVD purchases that rental does not satisfy, we worry convenience is far more important than collectability to most consumers.”
Well, is it?
Certainly, the people behind Redbox seemed to be streets ahead of their suppliers, the Hollywood studios, musclebound and even now unable to come to grips with the reality they’re in the digital 21st-century, and not the physical 1990s.
“Redbox highlights upcoming DVD releases on the side of each of their kiosks (see the video we created below, entitled The Redbox Threat), sends out tweets on Twitter weekly (www.twitter.com/redbox), and posts notes on Facebook (click here) all of which alert consumers to which brand new movies they can rent for $1/day at any Redbox kiosk,” writes Richard Greenfield in the Pali Research post, stating:
“Even worse, third-party iPhone applications such as Insideredbox … allow consumers to sort by most recent releases, find the movie at a Redbox closest to their current location and then even reserve the movie at that kiosk all via the iPhone app.”
Oh! The Horror!
“Redbox is Flooding the Market with Previously Viewed DVDs, Threatening Sales of New DVDs,” says a subhead to the story, which continues »»»
While previously viewed DVDs-for-sale have long-existed at Blockbuster, the rapid churning of Redbox’s kiosk business has taken the risks posed by this segment of the home entertainment industry to a new level. New movies, purchased and rented by Redbox, have been finding their way into the previously viewed market within a few weeks of release, threatening the sale of “new” DVDs at far higher price points. Our video above shows how Redbox has been selling the previously viewed movies themselves within their kiosks, however, we believe Redbox’s distributors have also been repurchasing DVDs from Redbox and shipping DVDs to other previously viewed outlets such as supermarkets.
Redbox is suing Universal Studios, says Pali.
Why?
Because, “Universal believes that it has the right to determine who it sells DVDs to and who its distributor sells DVDs to and under what terms those sales can occur,” Greenfield states, going on »»»
Essentially Universal wants to create a 45-day window before Redbox can offer DVDs for rent at $1/day (versus current day-and-date renting with the release of a DVD), limit the number of copies of a title per kiosk and prevent Redbox from selling DVDs into the previously viewed market. Redbox, on the other hand, believes that once it buys a DVD from a studio it should be able to do whatever it wants with that DVD under the First Sale Doctrine and that Universal cannot dictate the terms of Redbox’s rental business.
Should be able to do whatever it wants with that DVD under the First Sale Doctrine …
That has a certain familiar ring to it.
Meanwhile, “Last week, Sony became the first studio to reach an agreement to sell DVDs directly to Redbox,” says the story, adding:
“We believe Sony is essentially agreeing to sell Redbox DVDs at a modestly lower wholesale price as long as Redbox agrees to purchase a certain number of DVDs for every title released by Sony (instead of ‘cherry-picking’ the best rental titles) based on box office per title, similar to the way pay TV output deals work, in return for Redbox agreeing to destroy all previously viewed DVDs (vs sell them within Redbox kiosks and/or via third-party retailers).”
Too late?
No need to stay tuned.
First they ignore you, then they laugh at you, then they fight you, then you win ~ Mahatma Gandhi
get your movies for $1 – Rent, Rip, Return (Tutorial), July 23, 2009
Pali Research – Is Redbox Friend or Foe? What to Know if You Invest in Movie Industry Stocks, July 28, 2009
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July 28th, 2009 at 11:05 am
“in return for Redbox agreeing to destroy all previously viewed DVDs (vs sell them within Redbox kiosks and/or via third-party retailers).”
wait a second jon, does that mean, if I would find myself flying over the big ocean, to america, i could see something going on there with polycarbonate discs that I so far have only observed in my local supermarket where I get my “Einweg-Pfand” Money back?
That is, those kiosks where you get those DVD’s out have a mechanism that shredder the discs that the renter returns?
Now what a waste of scarce resources is that? One time viewed and then shredded?
reminds me of the “piracy the better choice” meme. if you have download and watched the film you can reuse the clusters for new “content” instead that you need to shred the HDD.
July 28th, 2009 at 12:40 pm
Sounds like RedBox got the short end of that stick.
July 28th, 2009 at 2:42 pm
A little talked about problem with redbox, is people taking out DVDs and not returning them. They don’t have a very effective collections department. Some folks might get a call if any. Lots of folks, are walking off with lots of DVDs ( A big problem in college towns)
July 28th, 2009 at 4:34 pm
My friend wanted to buy the movie The Water Horse. He wanted the extra features and such. Since it was only available as a 2-Disc edition, he assumed that a copy from Redbox would include both discs. It didn’t. The disc it sold him was labelled as “Disc 1″, but there was no Disc 2.
July 28th, 2009 at 4:39 pm
redbox has no late fees, hahahahahhahah
they will charge you $1 for every day you have it, until 25 days have passed, then you own it.
July 30th, 2009 at 9:17 pm
With Their Wallets, and Redbox is the winner. Cheap, convenient, no obligation, simple. I can’t see how Universal has a legal leg to stand on–they know they will lose the suit, so are trying other tactics, such as stalling. Can’t hold back what the consumer wants, though, forever. The longer Universal and the other holdout studios wait to cut deals with Redbox, the bigger their damage will be, IMO.