Techdirt. Stories about "redbox" Easily digestible tech news... http://www.techdirt.com/ en-us Techdirt. Stories about "redbox"http://www.techdirt.com/images/td-88x31.gifhttp://www.techdirt.com/ Fri, 26 Oct 2012 14:39:31 PDT Warner Brothers And Redbox Sign New Deal: Rental Blackout Window Cut From Ridiculous 56 Days To Equally Ridiculous 28 Days Tim Cushing http://www.techdirt.com/articles/20121025/20091920851/warner-brothers-redbox-sign-new-deal-rental-blackout-window-cut-ridiculous-56-days-to-equally-ridiculous-28-days.shtml http://www.techdirt.com/articles/20121025/20091920851/warner-brothers-redbox-sign-new-deal-rental-blackout-window-cut-ridiculous-56-days-to-equally-ridiculous-28-days.shtml 56 days -- up from the already ridiculous 28 days. Redbox looked at the obscene size of this window and said, thanks but no thanks, we'll just purchase your movies elsewhere.

This couldn't have made WB too happy, what with Redbox exercising the right of First Sale to bypass the studio's window and let itself in the front door. As for those looking to rent new releases while they were still new, Warner Brothers basically told them to shove off, and go look elsewhere for their entertainment. Having cut off a source of income and given more than a few potential customers a reason to check out alternate sources, the studio finally decided to renegotiate.

Here's how it all works out for Redbox (and by extension, the customers):
For titles with street dates between January 1, 2013 and December 31, 2014, the studio will grant Redbox the rights to offer Warner Bros. theatrical titles on Blu-ray Disc and DVD 28 days after their retail release dates.
Apparently, a stupid window is slightly less stupid when it's half the size it previously was. (But more stupidly, it's exactly where the window sat previously, before Warner decided not enough people were buying during the rental shutout). What Warner refuses to understand is that people want to rent movies when they logically should be available (i.e., day and date with the DVD release), rather than at some arbitrary point in the future. Warner is still willing to trade rentals for sales, even if it means giving up some rentals for file sharing. But the stupidity of the deal gets worse:
In addition, Redbox announced plans to join the Digital Entertainment Content Ecosystem (DECE) and has agreed to promote UltraViolet through a program of mutually agreed-upon promotions and marketing tactics designed to help retail customers discover UltraViolet.
On top of being forced to humor Warner's ignorant windowing, Redbox is now being made to play nice with the studio's too-little-too-late digital "offering." It's a bad deal all around, but the press release ignores all reality to paint a gloriously rose-tinted future for all involved.
The arrangement will improve the economics for both Warner Bros. and Redbox while ensuring consistent availability of Warner Bros. titles for the consumer.
Really? Judging from past experience, it seems more likely that Warner will continue to cripple the rental service by adding ridiculous agreements and stipulations while slowly killing off the everything anyone liked about it. There's nothing about this equation that "improves economics." Warner opens itself up to more piracy by setting up arbitrary windows and consumers looking for the latest Warner releases still have 28 days to kill before they become "consistently available."

Here's some more rah-rah, go team doublespeak from Warner Bros.
"We are pleased to once again have a direct relationship with Redbox, providing their consumers access to our movies," said Ron Sanders, president, Warner Home Video. "In addition, we look forward to working together on other key initiatives such as UltraViolet and creating promotional opportunities to offer consumers great content when and where they want it."
Translation: We are pleased that we have prevented Redbox from simply purchasing our movies from a third party and renting them out during our arbitrary blackout periods. In addition, we look forward to pushing our clunky digital services and creating restrictive "opportunities" to offer consumers great content when and where we say they can have it.

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]]> 'half-as-stupid'-isn't-the-same-as-'twice-as-smart' http://www.techdirt.com/comment_rss.php?sid=20121025/20091920851 Thu, 2 Feb 2012 09:44:34 PST Redbox Won't Cave To Warner Bros. Demands; Will Buy WB DVDs From Other Sources And Rent Them Mike Masnick http://www.techdirt.com/articles/20120201/13421717628/redbox-wont-cave-to-warner-bros-demands-will-buy-wb-dvds-other-sources-rent-them.shtml http://www.techdirt.com/articles/20120201/13421717628/redbox-wont-cave-to-warner-bros-demands-will-buy-wb-dvds-other-sources-rent-them.shtml legal battle with the studios, before caving and agreeing to delay rentals. However, it appears that the company may be ready to fight back again. Rather than accept an increased 56 day window with other annoying restrictions, Redbox is apparently telling Warner Bros. to take its dumb idea and to shove it, because it'll just buy the DVDs from alternative sources:
However, after lengthy talks between WB and Redbox this month, the companies couldn't come to an agreement over the new demands from the studio.

Instead, Redbox has opted to turn to "alternate means" to purchase the films on DVD and Blu-ray it makes available to rent for as low as $1.20 a night through its more than 28,000 kiosks -- and offer them the same day they hit store shelves to buy, according to Redbox senior VP of marketing Gary Cohen.
This could get interesting, because the last time they had this fight, the studios sought to block companies like Walmart from selling to Redbox, and Walmart put in place some restrictions to make it harder for Redbox to do this. I still think Redbox could potentially crowdsource these purchases, and get around any restrictions.

Either way, it's stories like this that show why the First Sale doctrine is so important. Redbox should be able to buy from alternative sources and then be free to rent those movies. And that's the case due to "first sale" rights -- even if Warner Brothers wants to pretend they don't exist.

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]]> good-for-redbox http://www.techdirt.com/comment_rss.php?sid=20120201/13421717628 Mon, 9 Jan 2012 07:28:31 PST WB, HBO Continue To Suck At Economics; New Policies Encourage Piracy Mike Masnick http://www.techdirt.com/articles/20120107/01435817321/wb-hbo-continue-to-suck-economics-new-policies-encourage-piracy.shtml http://www.techdirt.com/articles/20120107/01435817321/wb-hbo-continue-to-suck-economics-new-policies-encourage-piracy.shtml AdamR was the first to send over the news that Warner Bros. studio was increasing the "delay" period for rentals. If you don't recall, WB has been at the forefront of this braindead idea that, if it forbids Netflix, Redbox and Blockbuster from renting videos, maybe more people will buy the DVDs they release for sale. Of course, other studios took the time to study the matter and found that such a delay in rentals doesn't increase sales. Meanwhile, a separate study showed that such windows do increase infringement, as those who are perfectly willing to pay the price to rent, find the price to buy ridiculous... and seek alternatives.

It appears that WB is implicitly admitting that the strategy of delaying the rental period of a movie by 28 days has been a total failure, in the decision to increase the delay to 56 days. They're basically admitting that not enough people were "buying" in those 28 days... so they somehow think that doubling the wait will increase the purchases. It won't. If people really want to pay the extra money to buy the DVD, they're likely to do so pretty early on. It's not like they're waiting 50 days in and then saying "gee, I can't rent the movie, so I'll just pay a lot more money than necessary to own an obsolete piece of plastic."

Meanwhile, HBO, coming out of the same corporate lineage as WB, has decided to stop selling Netflix the DVDs of its shows. Netflix, of course, notes that it can get these DVDs from other sources, but it makes you wonder what HBO thinks it's accomplishing here. Pissing off its fans on Netflix by trying to force them into HBO's own annoying walled garden doesn't help build fans. And if it does actually lead to Netflix not offering HBO shows, then as plenty of commentators quickly noted, all they're really doing is encouraging more infringement.

This is basic stuff at this point. Not offering your content in simple, legitimate formats that the customers want doesn't help you at all. It just drives people to infringe. How does that help in any way, shape or form?

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]]> do-they-not-realize-this? http://www.techdirt.com/comment_rss.php?sid=20120107/01435817321 Fri, 14 Jan 2011 13:23:00 PST Redbox Realizing That Caving To Hollywood On 28-Day Delay Was A Bad Idea Mike Masnick http://www.techdirt.com/articles/20110114/11010112671/redbox-realizing-that-caving-to-hollywood-28-day-delay-was-bad-idea.shtml http://www.techdirt.com/articles/20110114/11010112671/redbox-realizing-that-caving-to-hollywood-28-day-delay-was-bad-idea.shtml caved in to the Hollywood studios, and agreed to annoy its customers with a ridiculous 28-day delay. We had many commenters say that people wouldn't care and it wasn't much of a big deal. However, the company is now admitting that the 28-day delay resulted in much lower holiday rentals than it had expected. Meanwhile, the only studio that has publicly released information about how its experiments with the 28-day delay went, Paramount, has said that such delays are bad for business, as it doesn't increase sales of DVDs, and that allowing Redbox to rent movies sooner actually helped the studio (and Redbox) make more money. So why do we still have those delays?

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]]> duh http://www.techdirt.com/comment_rss.php?sid=20110114/11010112671 Wed, 3 Nov 2010 13:32:27 PDT Warner Bros. So Thrilled With Netflix 28-Day Delays, It Wants To Have Longer Delays Mike Masnick http://www.techdirt.com/articles/20101103/12122611707/warner-bros-so-thrilled-with-netflix-28-day-delays-it-wants-to-have-longer-delays.shtml http://www.techdirt.com/articles/20101103/12122611707/warner-bros-so-thrilled-with-netflix-28-day-delays-it-wants-to-have-longer-delays.shtml delay rental releases by 28-days, with the hope that people who couldn't rent the movie would buy it. Warner Bros. has been claiming this strategy succeeded and that they've sold more DVDs because of it. I would doubt that it's the delay that's increasing sales, and it seems like a pretty short-sighted strategy to look to increase sales of a format like DVD right now. Either way, Warner Bros. is now claiming it may try to increase the window over 28-days. It's as if they want to drive more people to get the movie from unauthorized providers. Making it more difficult to let people watch movies the way they want to isn't a solution that will work long-term.

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]]> driving-fans-to-piracy http://www.techdirt.com/comment_rss.php?sid=20101103/12122611707 Wed, 6 Oct 2010 13:51:14 PDT Warner Bros. Claims That Annoying Customers With 28-Day Rental Delay Is Working Mike Masnick http://www.techdirt.com/articles/20101005/12213211291/warner-bros-claims-that-annoying-customers-with-28-day-rental-delay-is-working.shtml http://www.techdirt.com/articles/20101005/12213211291/warner-bros-claims-that-annoying-customers-with-28-day-rental-delay-is-working.shtml delay rentals of movies until 28-days after the DVD release, in the hopes that it would drive more people to buy. We suggested that was pissing off customers, just at a time when they're discovering they have (perhaps not very legal) alternatives, and it probably isn't a great business strategy. However, Khyle points us to the news that Warner Bros. CFO is claiming success with the program, claiming that DVD sales are up 15% following this strategy.

Of course, that leaves out all sorts of important details. Beyond the simple correlation ≠ causation issue, there are so many other variables here, I'd be hesitant to believe that the higher sales were due mostly to this delay. Perhaps there was just a popular movie that people really wanted to own when it came out. Or perhaps there were other promotions. Or, maybe, it's just a dead cat bounce. Either way, let's wait and see before declaring that pissing off your customers so much is a good idea.

The best part, though, might be the confident quote from the guy:
"You make money in the film business by putting your content in appropriate windows that matches up with the way consumers like to use it."
Thing is, he's got it wrong. It's not the "windows," but the different convenience and values that people consider. You can offer "the way consumers like to use it," all at the same time, if you want. The studios aren't doing this because they're so in love with the "windowing" system as a way to price differentiate, that they keep wanting to introduce more and more windows. At some point they'll realize that this is really dangerous short-term thinking. Pissing off people eventually comes back to bite you.

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]]> correlation? http://www.techdirt.com/comment_rss.php?sid=20101005/12213211291 Wed, 16 Jun 2010 08:53:07 PDT Paramount Says 28 Day Delay On Redbox Makes No Sense; Doesn't Cannibalize DVD Sales Mike Masnick http://www.techdirt.com/articles/20100615/1842549841.shtml http://www.techdirt.com/articles/20100615/1842549841.shtml it sees absolutely no reason to keep delaying such releases and instead will offer new release movies on Redbox at the same time the DVD goes on sale:
"There were two conclusions we came to," said Dennis Maguire, president of Paramount Home Entertainment. "There hasn't been a cannibalization of DVD sales from Redbox, and Redbox was allowing us to expand our business and ultimately make more money" than if the studio held back its DVDs to Redbox for a period of time.
Of course, this is exactly what many people said when studios like Warner Bros., Universal and Fox demanded the 28 day release, but it's nice to at least see Paramount actually looking at the data and realizing that Redbox isn't the evil destroyer of Hollywood that some of its competitors have made it out to be.

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]]> good-for-them http://www.techdirt.com/comment_rss.php?sid=20100615/1842549841 Mon, 26 Apr 2010 12:47:00 PDT Redbox Follows Netflix's Lead, Delays Fox and Universal DVD Releases by 28 Days Carlo Longino http://www.techdirt.com/articles/20100423/1148439156.shtml http://www.techdirt.com/articles/20100423/1148439156.shtml delay the release of their DVDs to its subscribers by 28 days. Netflix did the deal in order to maintain its access to movies for its streaming service, and the studios think it will help them sell more DVDs. The studios tried to get DVD rental service Redbox over a similar barrel by threatening its access to their DVDs. Redbox had already caved to Warner Bros., and has now done a similar deal to Netflix's, with Fox and Universal. And, just like all the earlier deals, this one's pretty stupid on the part of the movie studios. Let's go over why.

Redbox offers two main benefits to its customers: convenience and price. Its machines are everywhere these days, and its $1 per night price capitalized on the widespread consumer displeasure with Blockbuster and other rental chains' high prices and late fees. The Redbox customer is price sensitive; so is it really very likely that delaying the release of a movie by a month is going to get them to decide to shell out $15-$25 per movie to see it immediately after it's released? The same goes for Netflix subscribers. If they're already paying for their subscription service, why would they run out to buy a new release -- particularly when they already have to wait to get some new releases anyway. The studios think they can force customers to change their behavior by controlling access to new movies. All this plan is going to do is to illustrate to them that the part of the market they're aiming for with these delays really doesn't care enough -- or cares about other factors more -- to behave any differently.

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]]> misguided,-again http://www.techdirt.com/comment_rss.php?sid=20100423/1148439156 Mon, 5 Apr 2010 08:39:00 PDT Blockbuster Using Its Deal With Warner Bros. To Mock Redbox And Netflix Mike Masnick http://www.techdirt.com/articles/20100402/1833238859.shtml http://www.techdirt.com/articles/20100402/1833238859.shtml new deal with Blockbuster that seemed likely to confuse the hell out of consumers. That's because Warner Bros., in its backwards-looking wisdom, had already done deals with both Netflix and Redbox to not make new release movies available to rent until 28 days after their release. There is no good reason for this, other than it pisses off customers all around, and makes them less interested or inclined to bother watching Warner Bros. movies (hint to WB: you have competitors).

But the Blockbuster deal seemed confusing -- because most consumers wouldn't be following these silly deals and wouldn't understand why a movie had been "released" but wasn't available via their favorite rental service. Apparently, Blockbuster's answer to all this is to mock Netflix and Redbox for not carrying new releases. Seriously. Reader Daylyn sends in the following ad he recently saw that points out that Netflix and Redbox don't carry this movie:
Apparently, this is all part of Blockbuster's new WB-partnered advertising campaign: "hey, the movie studios screwed over our competitors! rent from us!" Looking around, it appears a few others have noticed this campaign as well, which went into place quite quickly after the WB deal was announced.

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]]> getting-desperate? http://www.techdirt.com/comment_rss.php?sid=20100402/1833238859 Tue, 23 Mar 2010 18:50:00 PDT Warner Bros. Latest Movie Release Strategy? Confuse The Hell Out Of The Market And Prop Up Blockbuster? Mike Masnick http://www.techdirt.com/articles/20100323/1418578683.shtml http://www.techdirt.com/articles/20100323/1418578683.shtml Netflix and Redbox to agree to delay renting new release movies for 28 days in an effort to get more people to purchase DVDs. For this, it got hit with a class action lawsuit. But now comes the news that it's signed a new deal with the financially troubled Blockbuster that has no such restriction. This has lots of people scratching their heads. The obvious answer is that Blockbuster is promising Warner a lot more money...

But there's a bigger issue here, which goes beyond just commentators scratching their heads: this is going to confuse a lot of customers at a time when that's the last thing Warner Bros. should be doing. Your average movie renter isn't paying attention to the silly games that Warner execs are playing, and all they want to know is how come they can't rent the latest release. If Warner somehow convinced all players not to rent until a certain date, then that would effectively have just shifted the release date further back (a dumb move in an age when windows are shrinking... but that's Hollywood for you). However, by having the movie available for rental in some places, but not others, it's now setting itself up for mass customer confusion, where people will hear that a movie is available, but then get pissed off that it's not available in their preferred rental system.

It's as if the folks in Hollywood haven't been paying attention to what happens to companies that aren't providing what their customers want.

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]]> at-least-that's-what-it-appears-to-be http://www.techdirt.com/comment_rss.php?sid=20100323/1418578683 Mon, 8 Mar 2010 22:51:00 PST Indiana County Decides Not To Charge Redbox After Public Outcry Mike Masnick http://www.techdirt.com/articles/20100308/0152598460.shtml http://www.techdirt.com/articles/20100308/0152598460.shtml threatening to file criminal charges against Redbox execs unless the company agreed to remove R-rated movies from its kiosks. The whole thing was instigated by brick-and-mortar video stores who didn't like competing with Redbox's $1 video rentals. However, as news spread about this threat, it seems that the residents of that county raised their voices and let the prosecutor know they wanted to keep their Redbox and its R-rated movies. The prosecutor noted that the standard for whether this was a problem was "community standards," and the community made it loud and clear to him that they wanted the Redbox kiosks to stay:
"It's not an exact barometer -- I didn't take a poll -- but it just seemed pretty clear to me that the community would not be behind the prosecution of this," Stan Levco said during Friday's news conference.
While it's good that he's backed down, I'm still not sure which is more troubling, that he initiated the threats at the behest of competitors, or that public outcry alone was enough to get him to back down.

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]]> lawsuit-by-public-opinion-poll http://www.techdirt.com/comment_rss.php?sid=20100308/0152598460 Wed, 3 Mar 2010 13:45:09 PST Indiana Prosecutor Threatens Redbox With Criminal Charges If It Doesn't Remove R-Rated Movies Mike Masnick http://www.techdirt.com/articles/20100303/1053438392.shtml http://www.techdirt.com/articles/20100303/1053438392.shtml 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.

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]]> let-me-introduce-you-to-the-constitution http://www.techdirt.com/comment_rss.php?sid=20100303/1053438392 Tue, 16 Feb 2010 16:10:42 PST Redbox Caves To Warner Bros., Will Delay New Movie Releases From Kiosks Mike Masnick http://www.techdirt.com/articles/20100216/1449188186.shtml http://www.techdirt.com/articles/20100216/1449188186.shtml 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?

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]]> dumber-and-dumber http://www.techdirt.com/comment_rss.php?sid=20100216/1449188186 Thu, 4 Feb 2010 13:40:33 PST Wal-Mart, Target Trying To Block Redbox From Purchasing DVDs? Mike Masnick http://www.techdirt.com/articles/20100204/1222178053.shtml http://www.techdirt.com/articles/20100204/1222178053.shtml legal fight with Redbox over DVD rentals. While some studios have come to their senses and are happy to work with Redbox, others have been trying to pressure the company into giving it a cut of rental revenue and/or delaying when it rents newly-released movies. Those studios convinced the big distribution wholesalers to stop selling to Redbox (which seems like a pretty clear restraint of trade or antitrust issue), and in at least one case had convinced retailers not to sell to Redbox. Of course, there are ways around that as well, and we even suggested that Redbox could crowdsource its movie purchasing.

In fact, to get around the studio blocks, Redbox was apparently already purchasing 40% of its DVDs at retail locations like Target and Wal-Mart. But both retailers are now making that more difficult. They've put in place limits directly targeted at Redbox, saying they won't sell more than five DVDs at any one time to any buyer. Yes, here we have a customer willing to buy an awful lot of product -- at full retail price -- and these retailers won't let them? While they claim it's to make sure movies are available for other customers, given the earlier reports of studios specifically asking retailers to block Redbox from buying, it makes you wonder. What sort of company would tell willing customers they can't buy a product that is available and in stock?

Still, in the end I doubt those limits will be very effective. Redbox still could go with that crowdsourced concept, and get its subscribers to purchase five DVDs at a time in exchange for free rentals. Eventually, the industry is going to have to realize that fighting Redbox is a mistake.

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]]> how-nice-of-them http://www.techdirt.com/comment_rss.php?sid=20100204/1222178053 Fri, 11 Dec 2009 08:44:00 PST If Hollywood Is Upset About $1/Day Movie Rentals, How Do They Feel About 6 Cents Per Hour Rentals? Mike Masnick http://www.techdirt.com/articles/20091210/0526447287.shtml http://www.techdirt.com/articles/20091210/0526447287.shtml 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?

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]]> it'll-destroy-Hollywood-even-more! http://www.techdirt.com/comment_rss.php?sid=20091210/0526447287 Wed, 9 Dec 2009 09:49:00 PST Study Being Promoted As 'Redbox Kills Jobs' Actually Shows That Hollywood Jobs Will Grow Mike Masnick http://www.techdirt.com/articles/20091207/2310207240.shtml http://www.techdirt.com/articles/20091207/2310207240.shtml Redbox's legal fight with a few movie studios who so hate the idea that Redbox is actually giving people something they want (legally) at a reasonable price (legally), that they want to kill it. The whole thing is so ridiculous that it's difficult to believe there's anyone out there defending the anti-Redbox studios' position (and, in fact, a couple of the other studios, with Paramount in the lead, have realized that it's smarter to partner with Redbox than to try to kill it). Yet, the Los Angeles Economic Development Corporation (a non-profit with LA government connections) has put out a report claiming that Redbox kills jobs and harms the economy throughout Los Angeles (thanks to reader Valkor for sending this in). If you want, you can read the full report (pdf) -- but prepare to be amazed as what the report actually says is quite different than the press release headline.

Hidden within the report are claims that the industry will continue to grow nicely for the next decade and that alternative business models will develop that more than compensate for any loss of revenue from reduced rental prices. But that's not what the headline of the press release says. No, it reads:
Study says low-cost DVD rentals could lead to $1 billion, 9,280 jobs lost
But, deep in the actual report? Why, it says the following:
The shift to digital delivery will provide new revenue streams for the industry and new opportunities... Increased availability of all types of digital content and media have changed lifestyles and will continue to contribute to demand for video products. Indeed, SNL Kagan forecasts continuing growth in overall industry revenues as alternative streams compensate for this loss of revenue. In total, SNL Kagan projects an increase in distributor revenues from all sources worldwide from $51.3 billion in 2008 to $67.6 billion in 2017. While the composition of these revenues will clearly change, distributors will continue to experience revenue growth into the next decade.
So how does it get from that to the headline? Well, it assumes that Redbox is decreasing revenue from traditional rental, and seems to assume that these other alternative revenue streams are not influenced by Redbox or other forms of distribution that are more convenient and cheaper and attract a new or different audience -- which seems like a dubious assumption. Another way of looking at this: it's as if the horse and buggy industry put out a report just as automobiles were coming to market that said, yes, the auto industry will be huge and will create millions of new jobs, but because a much smaller number of jobs are lost due to downsizing the carriage market, we can release a report saying that the auto industry is "killing jobs." Logically, that's ridiculous.

On top of that, it makes some odd assumptions throughout the report, continually throwing out the idea that Redbox itself might increase the revenue for the industry, repeatedly suggesting that the industry is mature and if there were a way to get more revenue out of it, it would have already been discovered. Of course, considering that the market has long been dominated by a single player, not prone to innovating, and with close ties to studios that have limited some of how it could act -- that assumption is highly suspect. In fact, the very reason that Redbox has been so popular (and which also explains the rise of Netflix) has been consumer dissatisfaction with the old Blockbuster model, which was designed to squeeze consumers.

To the authors' credit, they do try to be fair on other numbers and assumptions, recognizing that effects go in multiple directions and that there are other issues at play, but the press release headline claiming that Redbox costs the industry a billion dollars and nearly 10,000 jobs, when the actual report claims that revenue is increasing and will continue to do so, just seems hard to swallow. Unfortunately, every single press report covering this study seems to only take the PR headline from the report and repeat it, without anyone appearing to have read the part of the report that says the exact opposite of what the headline claims.

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]]> not-what-they-said... http://www.techdirt.com/comment_rss.php?sid=20091207/2310207240 Tue, 27 Oct 2009 08:02:00 PDT Could Redbox Crowdsource Its Way Around Movie Studio Blockades? Mike Masnick http://www.techdirt.com/articles/20091026/1843016685.shtml http://www.techdirt.com/articles/20091026/1843016685.shtml legal battle Redbox is facing with some of the movie studios. Redbox, of course, rents DVDs at a $1/rental from vending machines that it places all over the place. Some of the studios are upset that (a) they don't get a cut of each rental and (b) that Redbox also sells those DVDs. So they've been trying to force Redbox to sign agreements that would give them a royalty cut and which would put limitations on Redbox -- such as not renting out videos until well after the DVDs are released and also having the company destroy, rather than sell DVDs when they were done renting them. Of course, the labels don't have much of a legal claim here. Redbox has every right to buy DVDs and to then rent them (right of first sale and all that). But, what at least some of the studios have done is to demand that DVD wholesalers not sell to Redbox, which certainly seems like a typical restraint of trade situation. In at least one case, a studio has also told downstream retailers, like Walmart and Best Buy not to sell to Redbox either.

Now, you might think that Redbox could just send employees into those stores without saying where they're from, but those stores probably don't carry enough stock for Redbox to buy enough DVDs efficiently. But what if they did something different? In the comments to that post last week, our rather insightful community started suggesting ways that Redbox could get around the sales blocks from studios by crowdsourcing the acquisition of movies.

There were a few different suggestions on how this could work, but the basic idea, presented by commenter "McBeese" laid out the basics:
  • Consumers open online accounts with Redbox. The account contains a Paypal id for deposits.
  • Redbox publishes how many copies of each DVD that they want.
  • Joe Consumer buys the movie, watches it, and then logs in to the Redbox site and 'pledges' the DVD. Each pledge automatically reduces the amount of a particular DVD that redbox is seeking.
  • Joe consumer mails in the DVD with an associated pledge number. When the DVD is received, the agreed amount is deposited into Joe Consumer's account.
A little slower than buying in bulk, but unstoppable.
I'd argue that rather than paying the user for it, Redbox could just credit their account for a certain number of free rentals. Then, not only does Redbox get these movies, but it builds up an even more loyal userbase... with really no significant way for the studios to block this out. There are some things that are tricky about this -- including verifying that the purchased DVDs are what they say they are, and coming up with a way to accurately handle the inventory management, but it is creative, and it shows that as much as the studios want to think they can control this market, there's always going to be some way around their restrictions.

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]]> connecting-with-fans http://www.techdirt.com/comment_rss.php?sid=20091026/1843016685 Tue, 20 Oct 2009 16:07:42 PDT Looking At The Redbox Antitrust Fight Mike Masnick http://www.techdirt.com/articles/20091019/0403026583.shtml http://www.techdirt.com/articles/20091019/0403026583.shtml detailing the legal issues involved in the battles between Redbox and the various movie studios. The main question is whether or not it's an antitrust violation on the part of the studios to block distributors, wholesalers and retailers from selling DVDs to Redbox. The studios want (a) a revenue share from Redbox (b) Redbox not to offer new release DVD movies for rental and (c) Redbox not to sell used DVDs. The reasons are pretty obvious: Redbox is a much more competitive offering. Since it's a lot less labor intensive, it's able to offer the DVDs for much less (both rental and sale), and the movie studios are freaking out, because in their minds, their old revenue streams should never be allowed to decrease.

The statements from the studios on the dispute is incredibly disingenuous:
"The real complaint is Fox won't sell DVDs to Redbox on the terms Redbox demands, and that is not in our view an antitrust violation," said Watson, an antitrust expert who has teamed with Yosef Riemer, a litigation partner in Kirkland & Ellis' New York office, in representing Fox, part of News Corp.'s Fox Filmed Entertainment. "There's nothing in the law, antitrust or otherwise, that says a seller must sell its product at the price that the buyer demands on the date the buyer demands and through the distribution channel that the buyer demands."
Indeed, Watson is correct that no seller needs to offer the product at the price the buyer demands, but that's not what's being disputed here at all. Clearly, prior to Fox and some of the other studios throwing their hissy fit, the distributors had no problem selling DVDs to Redbox at the prices Redbox thought were reasonable. The studios sold the movies to the distributors at the usual price, and the distributors sold them to Redbox at the usual price. Everyone should be happy.

But... what happened now is that these studios (Fox, Universal and Warner Bros.) told not just the distributors (Ingram and Video Product Distribution) but also retailers like Best Buy and Wal-Mart to not sell to Redbox. That's restraint of trade. The studios have every right not to sell videos to whomever they want -- but those distributors and retailers can then sell to whomever they want. The studios should have no say in the downstream sales of the videos once they've been sold to the distributor, wholesaler or retailer. That's where the antitrust issue is. The studios are successfully controlling downstream sales.

The studios are either being disingenuous or are just playing dumb when they claim that there's no antitrust violation because end users can still rent movies from Blockbuster or Netflix. But, that's defining the wrong "user" for the market in question. The market is in being able to buy from the distributor/wholesaler, and the "customer" is a retailer like Redbox. And these studios have stopped that customer from being able to make a perfectly legitimate purchase. That's the antitrust issue, and it's amazing that the studios think anyone will believe their false market definition or this bizarre claim that this about Redbox demanding some special price. It's not. Hopefully the judge recognizes that and doesn't fall for the studios simply making stuff up.

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]]> is-it-an-antitrust-issue-or-not? http://www.techdirt.com/comment_rss.php?sid=20091019/0403026583 Tue, 8 Sep 2009 09:50:00 PDT Is There Any Innovation That Hollywood Won't Try To Kill? Mike Masnick http://www.techdirt.com/articles/20090907/0127156120.shtml http://www.techdirt.com/articles/20090907/0127156120.shtml stop Redbox from renting its movies. It gave Redbox a long list of ridiculous ultimatums, and told distributors not to sell to Redbox. In return, Redbox sued Universal. Since then, 20th Century Fox and then Warner Bros. joined in. Sony and Paramount are the only studios enlightened enough to do deals with Redbox.

But, that hasn't prevented the moral panic lobbying/promotional campaign from gearing up -- though, at least some appear a bit skeptical about it. The NY Times has an article that goes through the details and notes that Hollywood lobbyists have been working over time to convince the press to complain that Redbox rents R-rated movies to children. And they're also trying out some ridiculous claim about how Redbox is going to put studio plumbers out of work. Seriously. But, just you wait and see. It won't be long until articles start appearing claiming that Redbox kiosks are a threat to our children, since they can rent R-rated movies (the fact that these same kids can access whatever websites they want in the privacy of their own homes, with content much more graphic than any R-rated movie probably won't be mentioned).

But, of course, that's purely a moral panic -- and one that Patry even predicted in his book. What Hollywood and its lawyers are really worried about is that they don't get the same monopoly rents on pricing of DVDs. Once Hollywood got over its totally bogus fear of the VCR, it eventually embraced the idea of "windows." It's basically an attempt to do what economists call differential pricing -- where different people pay different amounts for the same basic product (or perhaps in slightly different forms). Classic differential pricing is a good thing in economics, if done right, because you can actually better optimize the market -- selling expensive (high margin) goods to those who will buy them, but making additional money on lower priced/lower margin goods to those further downstream, thus (in theory) maximizing profit.

Hollywood's version is a bit mucked up, of course, because it often will seek to abuse its monopoly position to squeeze excess rents out of the market with the government helping it -- and thus it freaks out when any sort of innovation (the internet, rental kiosks) come along. The real fear is that by introducing $1 rentals as soon as the DVD is released, it will cut into DVD sales (why buy at all when it's so cheap to rent?) and rentals from places like Blockbuster, who have worked out revenue sharing deals with the studios. So, once again, rather than compete in the market, Hollywood's lawyers are trying to convince the press and politicians that Redbox DVDs are "a threat to your children." But this is the exact same sort of "folk devil" that Patry describes Hollywood trumping up with every kind of technological innovation. Hopefully, we're smart enough not to fall for it this time.

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]]> can-you-say-moral-panic? http://www.techdirt.com/comment_rss.php?sid=20090907/0127156120 Fri, 14 Aug 2009 10:53:50 PDT Hollywood's War With Redbox Expanding To Netflix As Well? Mike Masnick http://www.techdirt.com/articles/20090814/0506145885.shtml http://www.techdirt.com/articles/20090814/0506145885.shtml stop Redbox from getting movies to rent via its kiosks (to which Redbox has responded by suing Fox), Warner Bros. has joined in as well, but isn't just trying to stop Redbox, but Netflix, too. It wants to force both companies not to rent DVDs until a month after the DVDs are actually released... unless the companies agree to share revenue from the rentals.

There's basically no legal basis for this move, which would only serve to piss off consumers (yet again). These companies are free to buy the DVDs and rent them out, but the studios want a cut of every rental. It's sort of like video game makes demanding a cut of every used game sale, or an artist demanding a cut every time a piece of his artwork is sold. It's entitlement society all over again. Nothing should happen without the original company getting paid. What they don't realize is how this limits them. Netflix and Redbox become less interested in promoting Warner Bros.' movies, because they're now a lot more expensive to those companies. Instead, Hollywood is handing incentives over to these companies to promote other films that don't demand their tithe.

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]]> shooting-the-foot http://www.techdirt.com/comment_rss.php?sid=20090814/0506145885 Fri, 7 Aug 2009 10:50:14 PDT Fox The Latest Studio To Declare War On Redbox Mike Masnick http://www.techdirt.com/articles/20090807/0321005804.shtml http://www.techdirt.com/articles/20090807/0321005804.shtml singing the praises of Redbox as the perfect model for movie distribution, claiming that the movie studios loved it, because they pay the studios a minimum guarantee with no returns. Cuban claims that this is a no-risk deal for studios who get pure incremental revenue. That didn't read right to me, because it was just a few months ago that it seemed like Universal Studios was doing everything it possibly could to kill Redbox. And, now, Mark alerts us to the news that 20th Century Fox is also demanding wholesellers not sell to Redbox. In fact, the article notes that Redbox only has a deal with Sony. It purchases all the movies from other studios through wholesale middlemen -- which seems to contradict Cuban's claims. Either way, this is a story of the movie studios letting their own greed interfere with innovation. These movies are being legally purchased. It's difficult to see how the studios have any leg to stand on in preventing Redbox from using their movies in its service. Isn't there a First Sale right somewhere?

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]]> not-a-good-idea http://www.techdirt.com/comment_rss.php?sid=20090807/0321005804 Fri, 27 Mar 2009 16:44:00 PDT Two Companies That Should Know Better Shut Down Helpful 3rd Party Apps Mike Masnick http://www.techdirt.com/articles/20090327/1536034280.shtml http://www.techdirt.com/articles/20090327/1536034280.shtml shut down helpful third party apps, we're seeing a number of stories about other companies doing something similar. First up is Last.fm, which has apparently started blocked a bunch of third party apps that had been using undocumented calls to stream content from Last.fm. Last.fm (now owned by CBS) was in a bit of a quandary, because its licenses with the major record labels (there they go again, blocking innovation) forbid streaming except in specific circumstances -- so these third party apps "broke" the agreement. But... that's not quite true, because the agreements are between Last.fm and the labels, not the third parties. Last.fm has now specific requirement to block others from creating apps. So, yes, Last.fm has every right to do this, and I'm sure the labels were demanding it do this, but it still doesn't make it a very smart move. Those third party apps were making Last.fm more valuable. Blocking them hurts the overall value and pushes people to go in search of other services that are more consumer friendly.

This move also comes right after Last.fm's recent decision to charge for streaming outside of the US, Germany or the UK. This also has folks up in arms -- and is driving away users in droves to other solutions. Last.fm has plenty of competitors out there, and working hard to make its own service less usable and less reasonable isn't going to help keep users around.

Meanwhile, a bunch of folks have sent in the story of how DVD rental kiosk operator Redbox has pressured a third party to takedown its Redbox iPhone app. The app was apparently pretty cool, making use of the phone's GPS to tell you where the nearest kiosk is, and letting you reserve the movie you want. There is some speculation that Redbox is upset that the app also pulls a list of promotional codes, allowing some people to rent movies for free -- but that's a misguided concern. If that's the real issue, then they should just change how their promotional codes work because (of course) the codes are still available for anyone to search and use online. Shutting down the iPhone app doesn't fix that at all.

Still, it seems that both companies should know better. Having third parties build apps that make your services more useful is a sign of success, and should be encouraged, not threatened and shut down. We live in an age where too many people focus on using intellectual property as a club to block any use -- even when those uses are helpful in making your core product even more valuable.

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]]> bad-news http://www.techdirt.com/comment_rss.php?sid=20090327/1536034280 Fri, 13 Feb 2009 15:11:43 PST Redbox Gets Bought: Another Success For Good Service At A Good Price Carlo Longino http://www.techdirt.com/articles/20090213/1041213764.shtml http://www.techdirt.com/articles/20090213/1041213764.shtml has been bought for up to $176 million by its biggest investor, Coinstar. It was hard to dislike Redbox: the company was having a lot of success in a space where other companies hadn't, by creating a convenient and easy to use service that delivered at a great price. Plus, anything that gets Hollywood's knickers in an enormous twist generally is pretty good. Universal Studios, in particular, tried to hamper Redbox through threats leading to lawsuits (update: clarified that Redbox filed the lawsuit... in response to a threat from Universal), perhaps hoping to kill the company off before launching rental kiosks of its own. But rather than try to destroy Redbox, Hollywood (and plenty of other people) should learn from it: the way to success isn't by putting all sorts of obstacles in the way of your customers' happiness, it's by providing them a service they want, delivered in an easy way, with a lot of value.

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]]> doing-things-the-right-way http://www.techdirt.com/comment_rss.php?sid=20090213/1041213764 Fri, 12 Dec 2008 16:19:00 PST Universal's War On Redbox Continues Carlo Longino http://www.techdirt.com/articles/20081211/1408223092.shtml http://www.techdirt.com/articles/20081211/1408223092.shtml 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.

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]]> innovation?-attack! http://www.techdirt.com/comment_rss.php?sid=20081211/1408223092 Fri, 31 Oct 2008 16:22:00 PDT Why Universal Wants To Kill Redbox: It's Launching Its Own DVD Kiosks Mike Masnick http://www.techdirt.com/articles/20081031/1112472703.shtml http://www.techdirt.com/articles/20081031/1112472703.shtml 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.

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]]> competition-through-lawsuit http://www.techdirt.com/comment_rss.php?sid=20081031/1112472703