Brandon alerts us to the news that an Indiana prosecutor is threatening to bring criminal charges against Redbox execs if they don't remove R-rated videos from the kiosks. The claim, of course, is that this makes it easier for those under 17 to access those movies. Of course, that doesn't explain what's actually criminal about it. Indiana is among the handful of states that should know this -- seeing as politicians there tried to pass a law stopping retailers from selling "mature" video games to kids -- but every law of that nature has been thrown out. The current movie rating system is not, in fact, enforced by the government as that would be a restriction on free speech. Instead, it's a voluntary agreement within the movie industry. In other words, there is no legal issue with these kiosks.

And, of course, the true story behind this threat is found early on in the article. It has nothing to do with "protecting the children" at all. Instead, this is a bunch of independent video rental stores trying to shut down the competition:

"I'm not on a crusade," said Paul Black, an Evansville attorney who says he suggested the inquiry to Levco's office on behalf of a client who operates several video store locations. "We're just looking for a level playing field here."

That's not leveling the playing field. It's trying to block competition -- and doing so with bogus charges of criminal behavior.

Some of the movie studios (admittedly, not all of them) have been on a braindead fight against Redbox -- despite the fact that Redbox had created a service that people liked and were paying for and that generated revenue for the movie industry. There are still ongoing lawsuits, but today came the news that Redbox caved to Warner Bros., on the most important point: delaying the availability of new release movies until 28 days after the release. Yes, this is the same deal that Warner Bros. convinced Netflix to agree to last month. Basically, Warner Bros. is telling people to either not rent its video or to download them from an unauthorized source.

The whole thing makes no sense at all. Warner Bros. mistakenly thinks that if people can't rent a particular DVD in the first four weeks of release, they're more likely to shell out money to actually buy the DVD. This is Warner Bros. pretending that it can influence customer behavior by denying them what they want. That's a strategy that has never worked well. What this means is that at the moment when Warner Bros. actually puts some marketing effort behind the DVD release, that movie will not be available from the most popular rental options. And, the bizarre reasoning put forth by Netflix that this would benefit customers by improving inventory and availability of movies is not seen in reality. So rather than pissing off some customers because a movie is not available, you're now pissing off all customers by making the movie not be available on purpose, and then effectively massively increasing the amount of time they have to wait to see the movie? Does no one at Warner realize that a lot of those "customers" will simply decide to go see other movies or to download an unauthorized copy instead?

Based on Warner Bros., logic here, why release movies at all?

So Hollywood is all concerned that Redbox DVD rentals at $1 per day are going to do serious damage to the Hollywood economy -- except, of course, that the actual numbers say exactly the opposite. Still, if they're all freaked out (and some are in court) over $1/day rentals, you'd have to imagine they're not particularly pleased about rentals that could be even cheaper. Rose M. Welch points us to the news of a new DVD rental kiosk operation, called Big Box DVD, which is moving forward with a business model of charging a whopping 6 cents per hour for a new release (4 cents per hour for an older release). For folks willing to just rent the video, take it home, watch it and return it, that can be quite cheap. Of course, if you keep it for a full 24 hours, it'll be a bit over a dollar. How long until we hear about how much damage this is doing to Hollywood?

A couple years back we pointed out how the entertainment industry kept trying to "compete" with new (legal and not-so-legal) online services, but always seemed to do so by being incredibly lame. And, you don't compete by being lame. It appears that this message still hasn't quite gotten through to some yet. With the movie industry facing new challenges concerning online distribution and innovative services like Redbox, here are two stories of old school players trying to "compete" but missing out on the part where they make their offering compelling.

The first comes from Josh in CharlotteNC, who points out that Blockbuster is trying to compete with Redbox and its widely available kiosks (and Netflix with its larger library of downloadable movies) by setting up kiosks in its stores where you can download movies. But... you can only download them to proprietary SD cards, and then it can only play on special proprietary hardware that participants in this program need to have. How is that a better experience then, well, anything? If you want a movie that can be downloaded, why not just let people download it at home? Why have people go out to download it?

Then we have a story sent in by Loydster, about how Sony Pictures is offering owners of new Sony/Bravia HDTV's the chance to download and watch the movie Cloudy With a Chance of Meatballs before the DVD release. While that is actually a nice tie-in between Sony's content business and its consumer electronics business, Sony (of course) has to screw it up. That's because the company thinks it can charge $25 to download the movie. The company seems to admit that it's charging this much because it doesn't want to piss off its retail partners (like WalMart), but it's difficult to see why it's worth doing the project at all if the pricing is going to be so ridiculous.

Experimenting with ways to compete is good... but being so obviously lame is not.

You'd think that movie companies would like it when people want to rent and watch their movies -- but surprise, surprise, only if it's on their terms. Universal has been fighting, for some time, with Redbox, the company whose kiosks rent DVDs for $1 per night, trying to get the company to sign a contract that would hamper its business model, while working on rental kiosks of its own. The WSJ is reporting that Universal asked a court to toss out Redbox's lawsuit over the contract last week, and that Redbox had to resort to "new acquisition strategies" in order to get a hold of the recent Universal release Wanted. Redbox wouldn't elaborate on those strategies, but it sounds as if Universal and its distributors cut the company off, as the studio had threatened. So once again, we're left with a company that's innovated in the movie space and delivered a product to consumers in a way they like, at a price they love. But since it didn't come from a movie studio, Universal wants to cut the company off. Once again, it's puzzling exactly how Universal can think that keeping people from seeing its movies can be good for its business.

It did seem a little odd that Universal Studios was trying to bully Redbox into an agreement that would kill off the DVD vending machine company. After all, having Redbox out there renting some movies (which it paid for) certainly seems better than it not even being an option. Initially, we just chalked it up to Universal trying to make sure it had more control over the rental market -- but a bunch of readers this morning are pointing out that there may be a much more direct reason. It turns out that Universal Studios is launching its own DVD kiosk system. Initially, it's in the UK, but it's likely there are plans to offer them in the US as well. So now the ridiculous "take it or leave it" bullying threat from Universal Studios to Redbox makes a lot more sense: it was designed to force a competitor out of business so Universal could have the market to itself.

In 1998 I worked with a company that was trying to deliver CDs and (eventually) DVDs via rental kiosks. At the time, the idea was hardly new. In fact we've detailed the long list of failed companies who got into the kiosk business over the last few decades. But, apparently, they all had the wrong strategy. What they should have been doing is suing over patent infringement. We were just talking about Redbox, one of the few companies that's made a successful go of DVD kiosks, and its lawsuit against Universal Studios, but it appears that the company is now being sued for patent infringement as well, by a company called DVDplay. The patent itself seems to cover a disc-based kiosk that's connected to the internet. Reading through the claims, it's difficult to see how there wasn't any prior art on this stuff or that it wasn't an obvious iteration on what had come before. But, really, what does that matter once you've got a patent and you can just sue away?

While I do think Blockbuster is trying a few interesting ideas in its ongoing effort to adapt to a rapidly changing market, some of its ideas are just flat out bad. For example, new Chairman and CEO James Keyes actually spent time at the company's recent shareholder meeting to unveil and talk up the possibilities of a special movie download kiosk that can be placed in stores. It sounds like someone got "kiosk fever." For those who don't follow the e-retailing space, I guess you can be forgiven for actually thinking digital kiosks make sense (though, barely). But the concept of in-store kiosks for digital content has been around for over 20 years, and shows up like clockwork every two years or so -- and fails miserably every time. People just aren't interested -- especially when they have the best, most useful "kiosk" they could ever need at their home in the form of their computer. The idea that people will want to go to a Blockbuster store to download a movie seems preposterous.