AVS Forum banner
1 - 20 of 27 Posts

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #1 ·
This is in relation to the discussion on the devaluation of physical media, and the impact on pricing and availability of new titles via streaming (VOD and subscription).

Quote:
On the eve of financial reports this week from Warner Bros. and Walt Disney, one analyst is asking studios to justify their sudden affection towards kiosks, notably Redbox.


Sony Pictures Home Entertainment and Redbox last week inked a five-year $460 million distribution agreement. Viacom CEO Philippe Dauman July 28 said Paramount Home Entertainment was in talks with Redbox and other kiosks.


Richard Greenfield, media analyst with Pali Capital, July 28 said the surge in DVD rentals due to the recession has empowered Redbox and other kiosk brands, as well as Netflix, thereby threatening long-term consumer behavior toward packaged-media sellthrough.


While there is a collectability aspect to DVD purchases that rental does not satisfy, we worry convenience is far more important than collectability to most consumers, Greenfield wrote in a research note.


Specifically, Greenfield questioned the wisdom of allowing Redbox kiosks in front of Wal-Mart, heretofore the largest individual retailer of DVD movies. The analyst said Redbox, which offers new-release movie rentals for $1 per day, has also begun offering previously viewed titles for $7, thereby catering toward the impulse consumer and directly impacting sellthrough at Wal-Mart.
Quote:
Greenfield said Redbox is offering new-release titles for sellthrough within a few weeks of rental, a major linchpin of its ongoing lawsuit with Universal Studios. Redbox continues to offer Universal titles by acquiring them through third-party retailers and distributors, according to the analyst.


While this works with the current number of kiosks and only one studio not working with Redbox, we wonder whether it is a sustainable model if other studios follow suit [with Universal] and the number of kiosks continues to grow rapidly, he said.


In its deal with Sony, Redbox, in exchange for a lower wholesale price, agreed to acquire a greater number of Sony titles and destroy them (no used sellthrough) after 28 days.


The analyst said the increase in used DVDs has resulted in a notable reduction in value realized for each Redbox DVD sold off (to its distributors) following the new-release rental window.


We suspect value to Redbox from previously viewed has dropped from $6-$8 to $4-$5 over the past 12-18 months, Greenfield said.
http://www.homemediamagazine.com/red...-studios-16549
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #2 ·
Obviously, Fox realizes the threat that Redbox (and kiosks) represent in the devaluation of physical media. I don't think they are going to be successful in denying Redbox access to their material due to the First Sale doctrine, and will have to accept that they should be focusing on supporting methods that lower their costs and provide higher margin.

Quote:
20th Century Fox Home Entertainment is seeking to impose a 30-day delay on the availability of its DVD titles in $1-per-night rental kiosks like Redbox, despite a pending lawsuit between Redbox and another studio over delayed releases.


The delay begins with the fall release Ice Age: Dawn of the Dinosaurs.


Kiosks were largely responsible for an 8.3% growth in consumer spending on movie rentals in the first half of the year, according to Rentrak, while DVD sales fell more than 15%.


But some studios are strongly opposed to the kiosks' $1 pricing, and the large volume of used discs they create, both of which they believe undercut new DVD sales.
Quote:
Fox said in a statement that the studio supports the vending machine business in a 30-day window following our initial home video street date. The basis of this position is to continue to provide the consumer with broad title choice and access to Fox movies while maintaining the quality image and value perception of Fox movies. Our desire is to maintain for Fox movies a thriving network of distribution serving all types of consumer preferences, on reasonable business terms for Fox as well as our distribution partners.


Time Warner CEO Jeff Bewkes on the company's earnings call last week also suggested that kiosks should fill a niche for renting films sometime after their general release.
http://www.videobusiness.com/article/CA6675070.html
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #3 ·
I also posted this in the Netflix thread, but it probably belongs here:




It looks like the fact that Redbox presents some very serious issues for the studios is becoming clearer.


Quote:
Analyst: Redbox Undermining DVD Value

The weed-like emergence of Redbox’s $1-per-day DVD rental kiosks across the country could render DVD movies below commodity-priced status, according to Pali Capital analyst Richard Greenfield.


Greenfield, in a research note, cited an online banner ad from Albertsons that offered five free one-day Redbox rentals in addition to a $5-off Albertsons coupon with the purchase of more than $25 worth of Proctor & Gamble products.


“Movie studios rely on the sale of DVDs, yet it would appear increasingly difficult to sell DVDs at $15-$20 a piece, if consumers believe movies are only worth $1/day, let alone ‘free’ with some groceries,” Greenfield wrote.

The analyst said studios and cable operators banking on increased margins via day-and-date video-on-demand (VOD) offerings (including iTunes) on new release titles priced from $3.99 to $4.99 could create the impression among consumers that other forms of home entertainment (notably sellthrough) are “terribly” mispriced.


“Worse yet, both VOD and iTunes often do not even have movies available the same day they hit Redbox,” Greenfield wrote.
http://www.homemediamagazine.com/red...vd-value-16642



As I have previously said, Redbox changes the perceived value of the content. Now the studios need to find a way to promote the less expensive distribution options since first sale doctrine makes it near impossible for the studios to prevent Redbox from acquiring, renting and then dumping the used discs on the market (at very low prices within several weeks of release).
 

·
Registered
Joined
·
200 Posts

Quote:
Originally Posted by PSound /forum/post/16953909


I also posted this in the Netflix thread, but it probably belongs here:




It looks like the fact that Redbox presents some very serious issues for the studios is becoming clearer.




http://www.homemediamagazine.com/red...vd-value-16642



As I have previously said, Redbox changes the perceived value of the content. Now the studios need to find a way to promote the less expensive distribution options since first sale doctrine makes it near impossible for the studios to prevent Redbox from acquiring, renting and then dumping the used discs on the market (at very low prices within several weeks of release).

If you think Redbox has serious issues with 1 day, $1 rentals. Netflix has dire issues with ever getting new releases with unlimited streaming rights. This is the reason that I don't think Netflix has a long term strategy to meet the needs of streaming consumers that want new titles.
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #5 ·

Quote:
Originally Posted by lakers42 /forum/post/16953999


If you think Redbox has serious issues with 1 day, $1 rentals. Netflix has dire issues with ever getting new releases with unlimited streaming rights. This is the reason that I don't think Netflix has a long term strategy to meet the needs of streaming consumers that want new titles.

Redbox does not have the issues... The studios have the issues of seeing their content devalued, on a relatively expensive (manufacturing and shipping) format.


Consumers already have day/date access to titles both via subscription and via $1 rental. That is the market that the studios are looking at... and they realize that as the model grows and expands (and kiosks are expanding by cannibalizing existing channels), that they need to find a new model that allows them to stop the ARPU bleed while lowering costs.
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #6 ·
More from Fox...

Quote:
Chase Carey, president and COO of News Corp., said the $1-per-day movie rental kiosk operator Redbox grossly undervalued 20th Century Fox Home entertainment content and that the media giant was actively trying to deal with it.


He said it was too early to determine whether the 5% decline in year-to-date home entertainment revenue was a permanent trend or due to the economy.


$1 [movie] rental, [however,] is clearly an issue for us, Carey said.

The COO said there is a need to build digital business models that generate dual revenue streams, rather than just cannibalizing existing businesses. He said efforts by other media companies to repurpose original content to subscribers on multiple platforms for free aren't the way to go.


I don't think TV Everywhere is the answer, Carey said. There needs to be larger broader strategy.
http://www.homemediamagazine.com/fox...ome-down-16634
 

·
Registered
Joined
·
200 Posts

Quote:
Originally Posted by PSound /forum/post/16954234


More from Fox...



http://www.homemediamagazine.com/fox...ome-down-16634

That's why Netflix's unlimited streaming model for new releases would further canninbalize the rental model and reduce the value of new releases further. Basically, the value of a $1 rental would go from $1 to pennies on the $1 for unlimited streaming to the end user. This is why Netflix will have challenges.
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #8 ·

Quote:
Originally Posted by lakers42 /forum/post/16957158


That's why Netflix's unlimited streaming model for new releases would further canninbalize the rental model and reduce the value of new releases further. Basically, the value of a $1 rental would go from $1 to pennies on the $1 for unlimited streaming to the end user. This is why Netflix will have challenges.

All it takes is simple math to figure out that the ARPU for Netflix customers (for studios) is $.80 per rental.


Netflix has repeatedly stated that they could double the studio revenue take by removing the USPS from the picture. In fact, they are the only studio partner I have seen that states that they WANT to pay the studios more for their content.


As it stands, the $1 overall revenue for kiosks is split between the kiosk operator, the retail location (Supermarket, Wal-Mart, etc) and the studios. A 3-way split between such a small ARPU is difficult for studios to take, especially in light of the loss of sell-through revenue caused by used discs hitting the market a few weeks after release. That is why Fox (and Universal) are concerned about Redbox.
 

·
Registered
Joined
·
1,491 Posts
So where do all the shiny discs come from that fill up the increasing number of kiosks?


Although vod is alive and well, subscription based service is a non event.


Studios will be compensated for dumping in one way or another. Sony found its way.
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #10 ·
More commentary and analysis:

Quote:
I spent last night catching up on emails and industry news and saw that another salvo has landed in the stare-off between the studios and Redbox: 20th Century Fox is calling for a 30-day delay in new release DVD movies becoming available in buck-a-night rental kiosks (for the original story, click here).


That's in sync with the perception by some studios that rental kiosks are the home entertainment industry's equivalent of dollar movie houses and, like their theatrical brethren, should not get first-run movies.
Quote:
The real issue, of course, comes down to dollars. Redbox is making a mint by renting studio movies and not sharing any of the proceeds with Hollywood. And at the same time, the kiosks are undercutting not just regular rental dealers, but also the sellthrough business, which in the studios' eyes is far more important.


I don't think this matter will be resolved anytime soon, if ever--hence, the differing approaches the studios have taken in dealing with Redbox, from Universal Studios' lawsuit to Sony Pictures' five-year deal to lease its titles to the kiosk company.


Stay tuned for what happens next.
http://www.homemediamagazine.com/tks...-customer-card
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #11 ·

Quote:
Redbox has filed suit against 20th Century Fox because of the studio's new distribution terms, which would prohibit Redbox kiosks from carrying Fox DVDs until at least 30 days after their initial street date.


Redbox's cornerstone principles include providing customers with a convenient way to rent new release DVDs at an affordable price, said Mitch Lowe, president of Redbox in a statement. At the expense of consumers, 20th Century Fox is attempting to prohibit timely consumer access to its new release DVDs at Redbox retail locations nationwide."


The suit was filed yesterday in Delaware Federal Court.


Fox has directed wholesalers to not sell its new release titles to any vending operator until 30 days after street date beginning with the fall release of its $151 million-grossing Ice Age: Dawn of the Dinosaurs.
http://www.videobusiness.com/article...?desc=topstory
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #12 ·

Quote:
Redbox Automated Retail has filed suit against 20th Century Fox Home Entertainment over the studio's decision to withhold its new DVD releases from the kiosk company by 30 days. Last year Universal Studios imposed a 45-delay on sales to Redbox and promptly became the first studio to be sued by the kiosk company (although, in all fairness, Universal sued first, to stop Redbox from renting its titles until given the OK by the studio).



This is getting very, very interesting. Studios are fairly unanimous in their sentiments that buck-a-night kiosks rentals are hurting the DVD sellthrough business, particularly since so many of those kiosks are now situated in the lobbies of Wal-Mart stores, the nation's No. 1 retail seller of DVDs. But they are split into two camps over how to deal with this menace: Fight them to the death, or sleep with the enemy.


Universal and Fox, clearly, are in the former category, while both Sony Pictures and Lionsgate have cut deals with Redbox to effectively lease new DVD releases to the kiosk company. Under those deals, sales of previously viewed rental product--which studios see as another big factor behind sagging DVD sales--is verboten.


I wonder what's going to happen next. My hunch: Warner will join Fox and Universal in their battle to treat Redox like a dollar movie house that shouldn't get first-run movies, while Paramount will cut some sort of deal, following Sony and Lionsgate. The wild card: Disney.
http://www.homemediamagazine.com/tks...re-we-go-again
 

·
Registered
Joined
·
6,992 Posts
I have a hard time believing that a lot of people are going to spend $10-$20 (or more) to buy movie that they can rent in a few days for $1.


There are buyers and renters. You can't force a renter to become a buyer by making them wait 30 more days. Yeah, there may be a few here and there who just can't wait so see a movie so will pay 1000-2000% more to buy it, but definitely not the majority, and not for the majority of movies.


Huge step backwards though if RedBox loses. What would be next for the studios? Making Netflix wait 30 days?
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #15 ·

Quote:
Originally Posted by Goatse /forum/post/16988113


Why does it matter to studios?? They get royalty's from renting either way. Just jack up rental royalty's.

Unless there is a revenue sharing agreement, the studios may not get rental revenue. Due to First Sale Doctrine, once a rental company (including Redbox) acquires a DVD they can rent it under whatever terms they want and not pay another cent to the studios.


All the studio ever sees is revenue from the initial sale (whether via a distributor or a retailer). What the studios are concerned with is that the low cost ($1) of Redbox does is encourage folks not to purchase their content because the alternative is so much less expensive.


Even worse for the studios is that Redbox will dump those DVDs on the used market as soon as 3-4 weeks after the titles releases. That means that a savvy customer knows they can pick-up great titles for ~ $7 if they are willing to wait a few weeks after the title is released. And this is after Redbox has taken a single DVD and satisfied the needs of MANY consumers who wish to view the content.


And keep in mind that Redbox is doing all this while the studios still have to absorb the cost to author, produce and manufacture the physical media. That is why the studios are so concerned with Redbox. They still have all the same costs, and are seeing their sell-through market decrease and seeing their rental customers satisfied with less revenue being returned to them.
 

·
Registered
Joined
·
1,491 Posts

Quote:
Originally Posted by mproper /forum/post/16987898


I have a hard time believing that a lot of people are going to spend $10-$20 (or more) to buy movie that they can rent in a few days for $1.


There are buyers and renters. You can't force a renter to become a buyer by making them wait 30 more days. Yeah, there may be a few here and there who just can't wait so see a movie so will pay 1000-2000% more to buy it, but definitely not the majority, and not for the majority of movies.


Huge step backwards though if RedBox loses. What would be next for the studios? Making Netflix wait 30 days?

While I understand the renters motivation (as I rent also) you don't seem to understand the collectors desire to own the movie even at a 2000% premium.

A few here and there who can't wait? LMAO. Those few only spend billions every year on shiny discs.

I would gladly spend bucks for my favorite tv show as long as I don't have to watch it on tv with motion artifacts and mind numbing commercial inturruptions.

C'mon, you must own something you spent big bucks on that you could easily rent for 1% of its cost.
 

·
Registered
Joined
·
6,992 Posts

Quote:
Originally Posted by fpconvert /forum/post/16990483


While I understand the renters motivation (as I rent also) you don't seem to understand the collectors desire to own the movie even at a 2000% premium.

A few here and there who can't wait? LMAO. Those few only spend billions every year on shiny discs.

I would gladly spend bucks for my favorite tv show as long as I don't have to watch it on tv with motion artifacts and mind numbing commercial inturruptions.

C'mon, you must own something you spent big bucks on that you could easily rent for 1% of its cost.

Uhmm....I don't think you understand what I said about you can't force a renter to become a buyer by making them wait 30 days. There are not very many renters who are going to pay the 2000% premium to own the movie so they can watch it 30 days earlier. They'll just wait 30 days and rent it. Again there are a few renters who will buy certain movies to avoid the 30 day wait, but not many, and those few will only be buying a small percentage of movies anyways (those ones they just can't wait to see) and still be renting the rest.


Yes, there are buyers (or collectors as you call them), but those aren't the ones who care if there are $1 rentals available Day&Date or not, and these are not the people the studios are targeting with this campaign. They are trying to "convert" someone who would normally be a renter into buying the movie, and I just can't picture it working.


Oh, and FWIW, I have over 750 dvds, so I was a collector at one point. I've watched about 25 of those more than once, and about 10 of those more than twice. The other 725 were a waste of money. Heck, I could even say only 4-5 of my DVDs have been watched enough times to justify the cost compared to what it would have been to rent them (according to Feedfliks my average Netflix cost per movie is about $1.28, so I'd have to watch a movie nearly 8 times to justify spending even $10 on the DVD or Blu-Ray).


That is why I rent now, and only own a handful of Blu-Rays: this is my personal preference, as I get no pleasure from collecting shiny discs anymore...they are just dust collectors and look 'cool' on my shelf. I use my money for other things, like vacations, actual HT equipment and videogames
Heck, the $10,000 or so that DVD collection cost me could've paid for a trip to Europe...


Oh, and I don't rent from Redbox (netflixer) so this doesn't really affect me either, but I can see a "trickle down" effect....first RedBox, then Netflix, etc...
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #18 ·
Hmmm... ya think?

Quote:
Following Redbox's filing of an antitrust lawsuit against 20th Century Fox Home Entertainment, Pali Capital analyst Richard Greenfield said the gloves are off in a battle the outcome of which could alter the future of the movie industry.


Fox last week ordered wholesale distributors VPD and Ingram, among others, to sell its new DVDs to Redbox 30 days after their street date.


While the suit carries the identical allegations (copyright misuse, antitrust and tortious interference) found in Redbox's ongoing litigation against Universal Studios Home Entertainment, Greenfield said Redbox's expansion of the copyright misuse allegation against Fox underscored claims that the studio's action constitutes a naked restraint of trade.

A war is clearly brewing, Greenfield wrote in a note. We believe Redbox's current business model poses a substantial risk to the future of the movie industry, as it sets an ultra-low price point for movie content that will impact consumers' decision-making process about all forms of movie-related commerce (theater-going, DVD purchase, video-on-demand, electronic/online rental and sellthrough).
http://www.homemediamagazine.com/kio...industry-16723
 

·
Registered
Joined
·
1,491 Posts

Quote:
Originally Posted by PSound /forum/post/16992209


Hmmm... ya think?

A war is clearly brewing, Greenfield wrote in a note. We believe Redbox's current business model poses a substantial risk to the future of the movie industry, as it sets an ultra-low price point for movie content that will impact consumers' decision-making process about all forms of movie-related commerce (theater-going, DVD purchase, video-on-demand, electronic/online rental and sellthrough).


http://www.homemediamagazine.com/kio...industry-16723

Well let's break it down:


Theatre going - am I going to wait 6 months to view the dvd instead of going to see a movie on a huge screen...No. Frugal folks can do a matinee or wait until it hits the second tier theatre and bring own snacks...which they already did before RB...even when the economy was good.


DVD Purchase: I'm going to buy it or rent it. If I was only going to rent then i'm really not in the buyer camp so nothing lost there. If I rent and like, I will buy. I might wait several weeks for used but I also might buy new w/ original packing/no stickers. The longer I wait is the less chance i'll buy.


VOD: Depends on when and how many RBs there are. I have none near me currently. I need a credit card. On a cold night in November, December, January, February or March am I trekking down to a RB? Maybe...Maybe not.


DL: DLs are not very good when it comes to new releases as they seem to only offer buy options. It may change or not.


Sellthrough: Used market sure. More product, lower prices. Sd dvd is old tech now and won't command premium prices. That was coming w/ or w/o RB. You could already see this with what places were willing to pay for old discs.


I am not a lawyer and do not know what the outcome of the case will be...that will decided over time. If the studios loose, they can always adjust wholesale prices accordingly. That might have an bearing on $1 rentals or not.

Sony has already made their deal.
 

·
Banned
Joined
·
3,705 Posts
Discussion Starter · #20 ·

Quote:
No bells will go off and no prizes will be awarded, but some consumer renting a DVD from a Redbox machine over the weekend will have in their hand the half-billionth rental to come from the machines, the company said Aug. 13.


Redbox is committed to providing our customers with timely, convenient and affordable access to new release DVDs, said Redbox president Mitch Lowe. It is this singular commitment to our customers that has fueled our tremendous success, and we thank our consumers for achieving this milestone with us.


Redbox started with a dozen kiosks in Denver, and today has more than 17,000.

Read the latest in the feud between Redbox and the studios in "Related News."
http://www.homemediamagazine.com/red...-weekend-16732
 
1 - 20 of 27 Posts
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top