We've already been covering 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.