Originally Posted by LexInVA
It forces people who want to buy or enjoy the movie with all the fixins and toppings to buy the retail packaging. Rental companies like Blockbuster and Hollywood Video were selling their used discs - essentially the same as retail packaging at the time - with no money going to the studios and that is what led to the watered down rental discs.
That's not entirely correct. Used discs were FAR more prevalent in the glory days of the video stores and they never pulled anything like this. The studios still did fine (DVD soared over VHS in just a few years), and they were still paid by the stores for the initial sale, even if it was a discounted rate.
What happened was that DVD/Blu-ray sales hit a peak. Growth stopped. Where in the preceding decade DVD grew every year, it suddenly hit a wall because of the economy. Blu-ray didn't gain traction as fast as the studios hoped. In steps desperate measures like this because the studios believe the person who rents a movie for $1 will then turn around and buy it for $20, or they'll ignore the rental all together. Totally different customer base, and most of these measures have been put to rest.
Warner used to be on a 28 day delay to rental stores but canned it. They tried a 56 day delay to Redbox/Netflix, and backed down on that too, reverting to 28. I'm assuming that'll be done and over with soon too. I think they're realizing that even if it (supposedly) means lost sales, the rental market still pushes a lot of discs and keeps interest high.