Universal Studios In a Tussle With DVD Kiosk Firm Redbox

DVD kiosk retailer Redbox, which filed for an IPO in June (and likely won’t do it anytime soon with the market conditions) is in a scuffle with Universal Studios, where the NBCU-owned company has threatened to cut off Redbox’s supplies of movies from its stable, reports WSJ. Redbox has been able to get content from other channels, though (but didn’t disclose how, something that would be an issue for sure if the lawsuit pans out), and did file a lawsuit in U.S. District Court in Delaware in October, alleging the studio was violating antitrust laws and misusing copyright. Universal asked the court to dismiss the lawsuit last Friday.

At the heart of the issue is that Universal dislikes Redbox pricing, saying they are too low (sometime as low as 99 cents for a day) and are hurting other DVD retailers. It also doesn’t give a cut of the rental price back to the studios. And it stocks a limited selection of movies, the one it wants, instead of taking diktats from the studios. Reasons enough, you would think. Redbox is one of the biggest kiosk operators, and has been increasingly popping up in supermarkets around where I live here in LA.

Universal also wants Redbox to not stock more than eight copies of a movie per kiosk, compared with the four dozen or so it does not, for popular releases. Also, it wants Redbox to stock its DVDs no earlier than 45 days after they hit traditional retailers like Blockbuster (NYSE: BBI), though that would hurt Redbox rentals as most of them occur in the immediate weeks after the DVD release.

Blockbuster, meanwhile, is also testing these vending machines, and will likely be renting them out higher than 99 cents (despite its recent efforts on lower price), and give a bigger cut to studios.

Download court documents (via PDF):
The Redbox lawsuit
Evidence of Universal’s demands
Motion to dismiss from Universal, and its reasoning on defending its distribution right

Photo Credit: Adam Melancon


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