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Paramount, Redbox Extend Rental Rev-Share Trial — With Focus On New Releases

Paramount Home Entertainment (PHE) and Redbox have extended their trial rental rev-share agreement by six more months. The two companies first announced the deal in August; it gave Viacom-owned Paramount an undisclosed percentage of the $1-per-night fees that Redbox charged for any of the studio’s movies it rented, for four months.

The trial, which now runs until June 30, 2010, is designed to give Paramount a read on whether it stands to gain more from playing nice with Redbox — meaning, continuing to give the kiosk-based DVD renter access to its new releases on the day they go up for sale — or to impose release delays like rival studios Fox, Warner Bros and Universal.

The other studios argue that Redbox’s cheap rentals cannibalize their new release sales, in particular; the extension of the trial means that Redbox will continue to have unfettered access to Paramount’s new releases. At the end of the six months, Paramount will have the option to sign a five-year deal with a guaranteed $575 million payout from Redbox.

So what does the extension say about claims that Redbox’s model will all-but destroy the big studios’ purchase revenue streams? No definitive conclusion yet — but per a statement from Dennis Maguire, worldwide president of PHE, it appears that Redbox could actually evolve into a (gasp) real partner for the studio, instead of an enemy: “We are enjoying our business relationship with Redbox … the data from our initial trial period has been encouraging.” Release.

One Response to “Paramount, Redbox Extend Rental Rev-Share Trial — With Focus On New Releases”

  1. I believe that Paramount is just letting the other studios do all the dirty work in protecting the video industry from the harm that redbox is causing. I really think that Redbox will be windowed eventually once these lawsuits are dismissed. I am however glad they put an opt out clause after 6 months and hopefully by then we can get this industry going in the right direction again.