RSS$1 rentals are not too cheap: Redbox sues 20th Century Fox
By Tim Conneally | Published August 12, 2009, 3:54 PM
In the second suit of its kind, DVD rental kiosk maker Redbox is suing 20th Century Fox in US District Court in Wilmington, Delaware, for allegedly intentionally delaying shipments of its DVD releases to Redbox.
In the first such suit at the end of 2008, Universal Studios Home Entertainment allegedly attempted to limit the availability of its titles in Coinstar-owned Redbox movie rental kiosks. The studio wanted its DVD releases to be off limits to Redbox for the first 45 days after release. The studio believed Redbox's $1 rentals have a devaluating effect on DVDs.
When Redbox sued Universal, its CEO Gregg Kaplan said, "Redbox is committed to providing our customers with the highest level of service and value, and we will continue to acquire DVD titles despite attempts to limit consumer access to titles at our kiosks."
Universal Studios Home Entertainment President Craig Kornblau told reporters at the time that he believed Redbox had only filed the action to scare other studios out of instituting similar delays.
Recently, other studios including Sony and Lions Gate have struck distribution deals with Redbox, though Sony stipulated that Redbox must destroy rental copies after their rental cycle ends instead of selling them for $7 as for other studios' releases.
The problem, according to analysts such as Pali Capital's Richard Greenfield, is that pay-per-view is vastly overpriced, and DVD rentals are equally underpriced. "Movie studios rely on the sale of DVDs, yet it would appear increasingly difficult to sell DVDs at $15-$20 a piece, if consumers believe movies are only worth $1 a day," Greenfield said earlier this month.
Why should this surprise anybody ? We all know that the Movie Association and their members are the greediest...they don't care about their customers...all they care is how fat their pockets can be....
Thank you Redbox for suing them
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|"... though Sony stipulated that Redbox must destroy rental copies after their rental cycle ends instead of selling them for $7 as for other studios' releases" ~ Must be nice for the employees to get free movies from Sony ;)
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|Sorry, Universal/Fox, but RedBox is in the right.
First Sale permits rental of purchased media. If you want rental retailers not to be able to rent for $1 you're only *LEGITIMATE* option would be to raise the costs to your wholsesalers and hope it gets passed on to the rental retailers....(thus hopefully making it non-profitable to rent for $1)
Of course, they *know* this will carry huge consequences and raise prices of the content to the consumer...which they're already in deep s*** for....so they're trying to weasel into getting their way by scare-tactics and brute-force.
Good luck with that. McDonalds has more money than God too. This should be an interesting fight...
To your corners! *ding*
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|Universal and Fox are not legally required to sell their DVD's to RedBox though. Universal Studios' CEO said it all when he mentioned (in the Reuters article) he is allowed to choose who can and cannot buy his company's DVD's.
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|"Universal and Fox are not legally required to sell their DVD's to RedBox though. "
They don't. They sell to wholesalers and the wholesalers can sell to whomever they want...for whatever they want. First Sale Doctrine. Look it up.
The CEO says what he wants people to believe. Shocking....
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|PC_Tool, are you suggesting that Universal and Fox are thus legally required to sell to wholesalers who do business with redbox then? And thus that they couldn't 'strongarm' wholesalers?
As far as I can tell with limited research, First Sale Doctrine requires a special license to allow revenue to be generated from rentals. As far as I can remember "allowed to rent" copies of movies cost roughly 4-5 times that of a regular retail copy and must be obtained directly from the licensor instead of any other wholesale/retail channel, though my experience in this is from knowing the proprietor of a rental store in a small town found in Canada in which I had access to printed material from various studios regarding 'coming soon' titles' ordering and pricing.
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|"PC_Tool, are you suggesting that Universal and Fox are thus legally required to sell to wholesalers who do business with redbox then? And thus that they couldn't 'strongarm' wholesalers?"
Um...no? I am seriously confused as to the point of that question... If the studios switch wholesalers...so will RedBox. If they "strongarm" wholesalers, wholesalers lose money and the studios lose money...regardless, RedBox will simply buy through another wholesaler or through a secondary agent.
"First Sale Doctrine requires a special license to allow revenue to be generated from rentals"
First Sale requires nothing but a purchase be made. Certain laws and limitations have been enacted, but for DVD's, they do not apply and there is case-law backing any individual's right to rent them. (See NEBG v Weinstein 2007)
The rental store owner experience you had may have been *before* DVD's were widely rented?
As it stands, in current law, anyone can buy a DVD...from anyone else...and rent it....to anyone...for whatever price they choose to. :)
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|The point is they cannot legally PREVENT Redbox from buying those movies from any and all retail sources.. Truth be told they could walk into Walmart buy 10 copies of said movie and stick them in the machine at the exit if they chose..
They made a deal way back when with rental shops to buy movies at "special prices" allowing them to get a legit profit off of blockbuster while still dropping the purchase price for mere mortals from the 100+ that VHS used to cost way back in the 80s..
Also while you may be right about the intent of First sale, its also not allowed to discriminate between brand X and brand Y.. IE if they could have do you not think they would have made 100% exclusive license with Blockbuster ? and completely shut out every other rental shop ?
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|Netflix 3 disc at a time unlimited plan and a fast DVD burner makes for a nice movie collection.
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|Only if you're a thief.
For people who want to do things the right way these studios really are making it hard. They're already sickeningly gouging on the sale of blu ray which is a technology being embraced, finally.
I don't quite understand the problem they have with Redbox renting DVDs for a dollar a day. They're getting people who may not normally be interested in dvds and movie renting clubs, people living at or below, or perhaps just above the poverty line, where getting to watch these dvds is almost considered a luxury or uncommon comfort at the least, especially at $1 a day...for the rest, it's not like people keep the dvds rigidly for a day - I guess I wouldn't know. Maybe people really do get a dvd or 2, watch it the same day/night and return it the very next day. But I use netflix and sometimes a DVD will sit there for a week unwatched, or watched and not put in the mailbox which is right outside.
I also don't really understand the analysts position...How are DVDs underpriced? If a DVD sells for around what, $5-$13 now, generally at $11-22 upon release if it's a popular title....that means it would take just 5-22 max days to cover the cost of a single DVD sold to Redbox, though they're obiously getting it from the lower end of the spectrum at wholesale, it means then that the studios are still making a heaping load of money since Redbox is getting a whole bunch of people who aren't on Netflix or with Blockbuster, etc. The perception of these new movies being 'worth' a dollar a day to consumers is COMPLETELY irrelevant in this case because it's not like Redbox is a hugely visible mainstream entity with 90+% influential penetration within all markets. It's a niche system which only so many people, people who probably would do without otherwise or just buy a dvd at walmart every few months are interested in. If said studios are getting their money anyway [FSD], wtf do they have to worry about? So they want everyone on the planet to end up paying $11-22 somehow for a movie they watch? Damn, just, damn.
It's not enough that SOME/MANY people pay $6-$12 a ticket to see it in a cinema, then possibly like it enough to watch it again on PPV or DVD (that's a lot of 'performance' money coming in for no tangible product exchanged, yes?...hell probably enough to cover Redbox a few times over), they want everyone to pay as close to the price they want as possible to RENT the damned things as well?
Greed is so ugly.
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|Good for Redbox!
Too many companies are trying to destory the first sale doctrine.
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