Rich Fiscus
13 Aug 2009 17:45
Following in the footsteps of Fox and Universal, Warner Entertainment has apparently decided to deny DVD rental kiosk operator Redbox access to new releases until a month after traditional brick and mortar stores get them.
Home Media Magazine is reporting that Warner Home Video has revised the terms of their wholesaler agreements to forbid sales to any kiosk operator. Instead those companies will be forced to cut deals directly with WHV.
This would allow them to require a 28 day waiting period as part of any agreement made directly with them.
While this move may prove advantageous to Redbox in their lawsuits against Universal and Fox, in which they are making antitrust claims, the effect on Warner Home Video revenue may be a much bigger problem for the studio.
Warner's plan can only succeed if consumers are choosing kiosks because of the movies they have rather than for reasons of convenience.
They are clearly presuming people who currently rent from Redbox when they leave a store or fast food restaurant would go out of their way to rent a movie somewhere else instead of choosing a different movie.
It seems at least as likely that kiosks are a major factor in the continued success of DVD rentals while sales fall.
The situation is somewhat reminiscent of that faced by music labels during the early days of commercial music downloads. Initially the labels insisted the music be sold on their terms, requiring DRM which clearly annoyed consumers.
After years of claiming that selling DRM-free music costs them money because it can be shared freely on P2P networks they were eventually forced to admit restricting consumers was the real problem.
In the intervening time they lost millions of sales to their own business model.
Instead of restricting how the movie can be played these studios are trying to force consumers to rent from outlets of their choosing. The theory is that people aren't buying movies because because kiosks don't offer that option.
The most obvious problem with this reasoning is the huge number of Redbox kiosks found in Wal-Marts across the US. And Wal-Mart most certainly does sell plenty of DVDs.