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Redbox Makes Nice with Warner Bros., Agrees to 28-Day Window

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Redbox has agreed to a new 28-day DVD window with Warner Bros., which would halt new release titles from appearing in its kiosks for four weeks after they go on sale at retail outlets. The agreement also ends a six-month legal battle with the studio, after Redbox sued Warner Bros. for attempting to inhibit it from obtaining new releases as soon as they came out.

The multiyear agreement goes into effect during the month of March, with Oscar-nominated football tale The Blind Side becoming the first major title to see a delayed release in Redbox kiosks. As part of the deal, Redbox has also agreed to destroy all Warner DVDs after they have gone through their lifecycle in the kiosks, rather than reselling them and further undercutting Warner’s DVD sales. The agreement runs through January 2012.

The agreement follows similar deals that Redbox has struck with Hollywood movie studios over the past year or so. Warner Bros. joins Sony (s SNE), Disney (s DIS), Lionsgate and Paramount (s VIA) in agreeing to new release windows with the DVD rental kiosk company. Meanwhile, Universal Studios and 20th Century Fox (s NWS) are still embroiled in legal battles with Redbox.

Even as Hollywood studios strike deals to keep new releases out of Redbox kiosks, some still believe that the kiosk business will undercut overall DVD sales and could potentially destroy the film industry. In one particularly spectacular report late last year, the Los Angeles Economic Development Corp. claimed that Redbox’s low-cost movie rental will cost the entertainment industry $1 billion in revenue.

Warner Bros. has shown an interest in making nice with DVD rental services in order to protect sales of its new releases. Earlier this year, the studio struck a similar windowing deal with Netflix (s NFLX) that will lengthen the wait for Netflix subscribers to get new DVD releases by 28 days, but would add more streaming titles from the studio’s film catalog to Netflix’s “Watch Instantly” streaming service.

Related GigaOM Pro content (subscription required): Redbox Success Means Netflix Should Consider Kiosks

13 Responses to “Redbox Makes Nice with Warner Bros., Agrees to 28-Day Window”

  1. Dan,

    Percisely. Unless you’re a diehard fan of the movie, you don’t know when a movie will be coming out. There’s no set schedule. Sure, you might see a cut-out at a video store, but that’s when they will be releasing it at THAT video store. Get it now? It is whenever the studio releases it. Fans of super-hits like Harry Potter might wait breathlessly for their DVD release but super-hits are very rare by their very nature. RedBox knows all of this and knows the VAST majority of their customers don’t really care and only make their selection based on what’s shown in their display cases.

    • Ryan Lawler

      Maybe I’m just not that big of a movie enthusiast, or maybe I don’t get out to retailers enough… But I don’t really know or care when movies or DVDs are released… Maybe that’s why the Hastings wuote resonates with me.

  2. I think this is a great move on the part of Warner and is a win for Redbox as well. Now Redbox will be receiving new releases from Warner at the same time as Netflix, though Redbox will now have to compete against the videos also being available for streaming by Netflix. While the Redbox customer is likely different, it will be interesting to see how this shift in availability of new release content in the rental channel will play out. I feel as though this is the beginning of the creation of a new window in the home entertainment space, an exclusive 4 week window for new release sales and for TV VOD.

    New release DVD sales and some TV VOD: 8-12 weeks after theatrical
    New Release Rental and Paid Streaming/Download: 12-16 weeks after theatrical

    It is an interesting move because right now, the first 4 weeks of DVD sales represent 70% to 80% of the lifetime sales of a DVD. The increased velocity from offering new releases immediately through a box like Redbox would surely not offset the amount of lost sales revenue.

    Over time, I think customers will become used to this new windowing of product and it may stick if the economics work out as well as the models likely predict. This will surely cause people to scream, but I absolutely believe it will happen.

    • I don’t think customers will think much about it. No one gets excited about a DVD release. Possibly a movie release (being the first time the movie can be seen by the public), but not a DVD release. And because there is no uniform release schedule in the industry, the public has no concept when DVD releases will be released. Even when a movie studio advertises their DVD release, there just isn’t excitement about it. The public will not need to get used to it because they’re used to it already.

      This is only a negative move by Warner if a competing movie studio allows its DVDs to hit RedBox earlier. See my previous post for why I think that will be the case.

      • Um, what?!? There are dozens of websites that spell out the schedule for movies to be released on DVD. Retailers and producers alike spend thousands on stand ups and cutouts that display the release date. Retailers and video stores list out at least the following week or two if not the next few months of what is coming. Especially in the case of a series such as Harry Potter (a HUGE seller for WB) a large portion of the fans eagerly await the release.

        Pretty much anything that has a date has a group following it, to say that there is no concept of when it will be simply means you specifically are not in the group following it.

  3. Just more Hollywood stupidity. People who rent a DVD for $1 from RedBox are not going to go and buy it from a retail store for $20 or more. They’ll simply wait.

    Now what a competing movie studio should do is not have any release window with RedBox so when their DVDs hit it, they appear as more fresh than Warner’s. Since the competitor’s DVD releases are closer to the movie theater releases, they’ll more benefit from the advertising of the movie in the movie theaters. By the time Warner’s gets to RedBox, customers might even view them as already too old.