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Discussion Starter · #1 ·

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In a major move that further solidifies a retail window for DVD/Blu-ray Disc movies, Warner Home Video and Redbox Feb. 16 said they have ironed out an agreement whereby the kiosk vendor has agreed to delay receipt of the studio's new releases for 28 days.


The delay mirrors an earlier agreement this year between Warner and online DVD rental pioneer Netflix.


The new agreement also marks the end of the lawsuit that Redbox filed against Warner Home Video in August 2009. The kiosk operator still has lawsuits filed against 20th Century Fox Home Entertainment and Universal Studios Home Entertainment.


"We support a vending window in light of the changing rental landscape and we are looking at a variety of new approaches," read a statement from Fox commenting on the Warner deal. "Since we are in litigation with Redbox, however, our policy is that we are unable to comment further."


Warner and Redbox will implement the deal in March, with the first delayed title slated for the March 23 release of The Blind Side. The new agreement runs through Jan. 31, 2012. Redbox has also agreed to destroy Warner DVDs following their lifespan in kiosks.


The 28-day window for Redbox balances the economics of our relationship while continuing to offer great value to their customers, said Ron Sanders, president of Warner Home Video. This accord establishes a mutually beneficial relationship that will foster an ongoing and productive partnership.


Redbox must have found the new Warner deal more profitable, said analyst Eric Wold with Merriman Curhan Ford in New York.


"Knowing that Redbox would not enter into any studio distribution deal that has lower economics than what the company was experiencing on its own with the workaround programs, then I view this as a strong positive," Wold said. "Clearly management has calculated an equal or upside margin benefit to moving towards this deal. This and the removal of the lawsuit should remove some clouds from the company's outlook and stock price."


Indeed, Mitch Lowe, president of Redbox, said the agreement gives the kiosk vendor wider access to Warner titles, including movies with box office tallies below $20 million that Redbox had opted to ignore due to excessive procurement costs.


We'll get a lot better selection and we'll get the [copy] depth that matches the demand, Lowe said. That, along with [access to] Blu-ray titles and significantly lower [disc] costs makes this a really good deal for us and Warner.
http://www.homemediamagazine.com/kio...r-titles-18464
 

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Coinstar CEO: Blu-ray Rentals Likely by Mid-Year, at Higher Price

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On the heels of a distribution deal with former litigant Warner Home Video, Coinstar CEO Paul Davis Feb. 16 said its Redbox subsidiary would likely begin offering Blu-ray Disc rentals by the middle of the year.
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The CEO said a price point for Blu-ray had not been determined, although he believed it would for sure be higher than our standard DVDs.
http://www.homemediamagazine.com/red...er-price-18469
 

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Discussion Starter · #5 ·

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Originally Posted by Wendell R. Breland /forum/post/18149485


I've said from the very beginning about Redbox, If you want to play, you have to pay.


IMO, Redbox will be increasing the amount they charge per rental sometime this year. We already know they have been doing this in test markets.


You can bet Netflix is very glad of this news.

Not sure why you would come to that conclusion. Their costs are actually going down as part of this deal.


The questions is how will this impact their growth. Is their $1 rental model as compelling to consumers if their are alternate ways to rent new releases. Their entire model is based on new releases for a bargain price. What happens when they become a bargain priced service for releases that have already been through the peak period for B&M rentailers.


I do agree that this benefits Netflix.
 

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Quote:
Originally Posted by PSound /forum/post/18151334


Not sure why you would come to that conclusion. Their costs are actually going down as part of this deal.


The questions is how will this impact their growth. Is their $1 rental model as compelling to consumers if their are alternate ways to rent new releases. Their entire model is based on new releases for a bargain price. What happens when they become a bargain priced service for releases that have already been through the peak period for B&M rentailers.


I do agree that this benefits Netflix.

The cost are going down because they can once again get volume discount from the producer without paying a commission to a retailer when buying disk, not because Warner made any concession.


Redbox lost.
 

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"volume discount from the producer"..."not because Warner made any concession"


Spot the disconnect? Warner caved by giving huge discounts to Redbox to get the 28 day window. So Redbox substantially lowers costs, increases margins without raising rates and increases its selection. How is it Redbox lost?
 

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Discussion Starter · #9 ·

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Originally Posted by Crimsont /forum/post/18152492


"volume discount from the producer"..."not because Warner made any concession"


Spot the disconnect? Warner caved by giving huge discounts to Redbox to get the 28 day window. So Redbox substantially lowers costs, increases margins without raising rates and increases its selection. How is it Redbox lost?

Exactly. Ultimately Redbox had no reason to enter a deal that did not support their profitable and growing business.


Quote:
Redbox must have found the new Warner deal more profitable, said analyst Eric Wold with Merriman Curhan Ford in New York.


"Knowing that Redbox would not enter into any studio distribution deal that has lower economics than what the company was experiencing on its own with the workaround programs, then I view this as a strong positive," Wold said. "Clearly management has calculated an equal or upside margin benefit to moving towards this deal. This and the removal of the lawsuit should remove some clouds from the company’s outlook and stock price."


Indeed, Mitch Lowe, president of Redbox, said the agreement gives the kiosk vendor wider access to Warner titles, including movies with box office tallies below $20 million that Redbox had opted to ignore due to excessive procurement costs.


“We’ll get a lot better selection and we’ll get the [copy] depth that matches the demand,” Lowe said. “That, along with [access to] Blu-ray titles and significantly lower [disc] costs makes this a really good deal for us and Warner.”
http://www.homemediamagazine.com/kio...r-titles-18464
 

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This is going to give Blockbuster online and their stores a boost if more studios follow Warner's lead. If you cannot get day and date releases at Redbox and Netflix from Warner, Universal, Fox (and most likely Disney and Paramount would follow) for at least 28-45 days, this could really hurt Redbox and Netflix and boost Blockbuster and PPV. I know I would be forced to switch from Netflix to Blockbuster if the other studios impose delays as well. If this ends up just being Warner, I don't think the impact will be as big.
 

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Discussion Starter · #11 ·
And from the press release:


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The new arrangement provides redbox with reduced product costs, sufficient quantities of product and optimal stock levels four weeks after street date as well as extends redbox's access to Blu-ray titles, which redbox is currently testing in select markets.
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"This agreement enables redbox to fulfill our commitment to providing consumers affordable and convenient home entertainment," said Mitch Lowe, president, redbox. "By agreeing to a delayed release date, redbox can now acquire Warner Home Video titles at a reduced product cost, preserving value for our consumers and increasing customer access to Warner titles at redbox locations nationwide."
 

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Quote:
Originally Posted by PSound /forum/post/18152853


And from the press release:

Haha, which goes against everything Redbox had been fighting against (access to day and date releases). My guess it that Redbox realized they were going to lose the lawsuit against the much more powerful Warner.



Of course Redbox is going to spin this as a positive thing for them. Definitely not a positive thing for consumers though. Especially if more studios follow Warner's lead (which we know at least Universal and Fox are considering).
 

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Quote:
Originally Posted by ack_bk /forum/post/18152820


This is going to give Blockbuster online and their stores a boost if more studios follow Warner's lead. If you cannot get day and date releases at Redbox and Netflix from Warner, Universal, Fox (and most likely Disney and Paramount would follow) for at least 28-45 days, this could really hurt Redbox and Netflix and boost Blockbuster and PPV. I know I would be forced to switch from Netflix to Blockbuster if the other studios impose delays as well. If this ends up just being Warner, I don't think the impact will be as big.
Quote:
The CEO said the Warner deal would likely have no effect on current license deals with Sony Pictures Home Entertainment, Paramount Home Entertainment, Lionsgate and Summit Entertainment, among others, for which Redbox is paying more than $1.1 billion over the next five years
http://www.homemediamagazine.com/kio...r-titles-18464
 

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Discussion Starter · #14 ·

Quote:
Originally Posted by ack_bk /forum/post/18152820


This is going to give Blockbuster online and their stores a boost if more studios follow Warner's lead. If you cannot get day and date releases at Redbox and Netflix from Warner, Universal, Fox (and most likely Disney and Paramount would follow) for at least 28-45 days, this could really hurt Redbox and Netflix and boost Blockbuster and PPV. I know I would be forced to switch from Netflix to Blockbuster if the other studios impose delays as well. If this ends up just being Warner, I don't think the impact will be as big.

Blockbuster is tied up in revenue sharing deals in order to get sufficient quantities of discs to stock their rentailer stores. If the studios really want a broad sell-through window, then Blockbuster will follow suit.


Where they may gain is their recent investments in Digital Distribution. If Warner delays physical media rental, but allows VOD (and the fat margins available there), then Blockbuster is well positioned to gain in that market.
 

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Quote:
Originally Posted by ack_bk /forum/post/18152897


Haha, which goes against everything Redbox had been fighting against (access to day and date releases). My guess it that Redbox realized they were going to lose the lawsuit against the much more powerful Warner.


Of course Redbox is going to spin this as a positive thing for them. Definitely not a positive thing for consumers though. Especially if more studios follow Warner's lead (which we know at least Universal and Fox are considering).

The judge ruled that Redbox DOES have a case against the studios that pertains to anti-trust.


So your guess doesn't hold too much water.


Redbox made the deal because it is in their best interest.


Just like WB is going after a rental delay window because it is in their best interest.
 

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Quote:
Originally Posted by Lee Stewart /forum/post/18152904

http://www.homemediamagazine.com/kio...r-titles-18464

Depends on the agreements. I am sure the studios have "get out clauses" with all of their contracts. Pretty sure I read that Sony had the option to change the terms of their agreement with Redbox.


Time will tell. If other majors follow I expect them to really put the pressure on the studios that have contracts in place with Redbox.
 

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Quote:
Originally Posted by PSound /forum/post/18152907


Blockbuster is tied up in revenue sharing deals in order to get sufficient quantities of discs to stock their rentailer stores. If the studios really want a broad sell-through window, then Blockbuster will follow suit.


Where they may gain is their recent investments in Digital Distribution. If Warner delays physical media rental, but allows VOD (and the fat margins available there), then Blockbuster is well positioned to gain in that market.

VOD is the most interesting part of this. Warner is the most aggressive of the studios when it comes to day and date VOD. I would think the multichannel providers (cable, telco and sat) would stand to benefit the most if Warner maintains day and date VOD/PPV, espeically HD, with DVD.
 

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Discussion Starter · #18 ·

Quote:
Originally Posted by ack_bk /forum/post/18152897


Haha, which goes against everything Redbox had been fighting against (access to day and date releases). My guess it that Redbox realized they were going to lose the lawsuit against the much more powerful Warner.



Of course Redbox is going to spin this as a positive thing for them. Definitely not a positive thing for consumers though. Especially if more studios follow Warner's lead (which we know at least Universal and Fox are considering).

This was an agreement. Take a look at Redbox's latest financial filings. The workarounds were costing them more, but they were still profitable and growing.


Warner truly believes the delay will boost sell-through. They made an offer to Redbox that Redbox believes will allow them to have better profits than if they would continue their current workarounds. The lost revenue for Redbox from not renting on release date must have been mitigated by significant acquisition discounts.


The analysts following Redbox tend to also believe this is the case. The market is also rewarding Coinstar after this release, and after Coinstar released guidance for the year reflecting this deal (and that Redbox had now acquired 90% of the product they need to stock their kiosks for the rest of the year).
 

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Quote:
Originally Posted by Lee Stewart /forum/post/18152938


The judge ruled that Redbox DOES have a case against the studios that pertains to anti-trust.


So your guess doesn't hold too much water.


Redbox made the deal because it is in their best interest.


Just like WB is going after a rental delay window because it is in their best interest.

Offering day and date releases for $1 per night is the reason Redbox has thrived. Redbox was willing to fight Warner tooth and nail (along with Universal and Fox) for that right. Redbox caved for a number of reasons. Sure they get cheaper disc from Warner, but they are now forced to destroy those used movies vs selling them, and they risk losing customers to other rental companies (including PPV from cable/sat) for those that don't want to wait. Again if this is just Warner, I think Redbox and Netflix will be okay. If this becomes Univeral and Fox (and potentially other studios) this could be a nightmare for Redbox and Netflix. But especially Redbox because day and date is their bread and butter. People don't flock to Redbox to rent catalog titles.
 

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Discussion Starter · #20 ·

Quote:
Originally Posted by allargon /forum/post/18153017


VOD is the most interesting part of this. Warner is the most aggressive of the studios when it comes to day and date VOD. I would think the multichannel providers (cable, telco and sat) would stand to benefit the most if Warner maintains day and date VOD/PPV, espeically HD, with DVD.

I agree. Warner is VERY high on the prospect of growing Digital Distribution as they see the margins there as a better business model once it grows in overall percentage of Home Video.
 
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