James Delahunty
8 Aug 2009 5:59
20th Century Fox has decided to follow Universal Studios by forcing distributors to stop selling new DVDs to Redbox, which operates low-cost DVD rental kiosks. Fox does not have any distribution deal with Redbox, instead DVD distributors such as Ingram and VPD, who do have deals with Fox and other studios, provide the rental service with DVDs. Fox believes the low costs undervalue the product and threaten DVD sales.
The studio has warned distributors not to sell DVDs to the service until at least 30 days after release. Coinstar and a McDonald's subsidiary jointly own Redbox, which has kiosks at 10,000 retail locations in the United States, such as McDonald's restaurants, Wal-Mart and other store. They rent out DVDs at $1 per day and sell used DVDs for $7 a piece.
Each kiosk rents out an average of 50 titles per day, and there are more kiosks than Blockbuster stores. Users can even reserve movies on the Internet in advance and get them from a specific Kiosk. The movie studios don't take issue solely with the low prices, but also worry that the kiosks are cutting down the number of customers that will visit Blockbuster and other stores where they are more likely to buy new DVDs.
Universal made the first move against the new system by forcing distributors to wait until 45 days following a movie release before they can sell to Redbox. Redbox filed a lawsuit against Universal for abuse of copyright laws and anti competitive behavior which was met with a Universal countersuit.
Money can heal all wounds in this conflict however, as a source told the Wall Street Journal that Fox would consider providing movies to Redbox on the day of release if Redbox accepts "better economic terms". Redbox reportedly declined such an offer.