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Discussion Starter · #1 ·
WoW!! Warner must have offered incredible discount concessions to pull off this deal!

Quote:
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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Discussion Starter · #3 ·

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Originally Posted by KLJ /forum/post/18149437


so will you be able to rent from anyone within the first 28 days? blockbuster?

Currently Blockbuster. It is hard to know what will happen with them. They have traditionally been studio lap dogs, and they need to keep the relationships strong as they make the big push into internet VOD.


Local rental stores will be able to rent day/date due to First Sale Doctrine. Heck, all of this may spark a comeback of the Mom and Pop rental shops.
 

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Quote:
Originally Posted by PSound /forum/post/18149177


WoW!! Warner must have offered incredible discount concessions to pull off this deal!



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

Unlike you I don't see this as a victory for Redbox. They litteraly folded and did what the studio asked of them.


I don't know where you get the idea the Redbox won.


They are stuck with the 28 days delay and they are prohibited from selling the used DVD. How can you call this a win?


You maybe the only one that see Redbox as anything then crawling on their bellies and asking master Warner for some crumbs.
 

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Discussion Starter · #5 ·

Quote:
Originally Posted by Karmyna /forum/post/18150510


Unlike you I don't see this as a victory for Redbox. They litteraly folded and did what the studio asked of them.


I don't know where you get the idea the Redbox won.


They are stuck with the 28 days delay and they are prohibited from selling the used DVD. How can you call this a win?


You maybe the only one that see Redbox as anything then crawling on their bellies and asking master Warner for some crumbs.

I didn't say that Redbox "won". This is a massive concession for Redbox.


It is with that in mind that I am thinking that Warner must have offered some incredible discounting of discs. Even then, I am not sure if this is good for Redbox in the short term. The only way this makes sense is for them to avoid becoming a buggy whip company and conceding to studio demands to get access to content to be distributed digitally.
 

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Quote:
Originally Posted by PSound /forum/post/18150691


I didn't say that Redbox "won". This is a massive concession for Redbox.


It is with that in mind that I am thinking that Warner must have offered some incredible discounting of discs. Even then, I am not sure if this is good for Redbox in the short term. The only way this makes sense is for them to avoid becoming a buggy whip company and conceding to studio demands to get access to content to be distributed digitally.

I think the discount is in volume buying vs retail price they had to pay recently. So in the end they don't really get a bonus, they just go back to the point they were before their tantrum.


And it isn't a case of being a buggy whip company. It is a case of who got the control, those who produce and own the right to the media or the resseller. Especially in this case when only one resseller tries to dictate to the producer and the rest of the resseller how things should be done. They didn't had the support of the other in their own field.
 

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Discussion Starter · #7 ·

Quote:
Originally Posted by Karmyna /forum/post/18152260


I think the discount is in volume buying vs retail price they had to pay recently. So in the end they don't really get a bonus, they just go back to the point they were before their tantrum.

I doubt that is the case. Warner provided additional discounts to Netflix in order to get the 28 day window from them. I am guessing Redbox got at least as good a deal.

Quote:
And it isn't a case of being a buggy whip company. It is a case of who got the control, those who produce and own the right to the media or the resseller. Especially in this case when only one resseller tries to dictate to the producer and the rest of the resseller how things should be done. They didn't had the support of the other in their own field.

Umm... what?


Redbox had shown that they could do short-term workarounds. It did increase their costs, but it kept their very successful model in place. The problem with their model is that it is not sustainable in the long term as physical media declines. They needed to eventually partner with the studios to be relevant in the long term.
 

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Discussion Starter · #8 ·
Comments from Redbox and analysts about the discounts:


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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Discussion Starter · #9 ·
Some more interesting analysts comments about the deal. I am not quite as bullish as they are, but perhaps they know deals if the discounting that has not been released to the general public:

Quote:
* Steven Rees, J.P, Morgan: Overall, we believe this agreement is a positive for the stock and significantly reduced the near-term costs and challenges of the workaround'.

* Ari Black, Thomas Weisel Partners: The agreement is accretive to EBITDA, and removes the risk of buying and selling DVDs on the open market, he writes. We believe there is now a lot more certainty that Redbox will be able to maintain margins going forward.

* Eric Wold, Merriman Curhan Ford: We believe Conistar management has proven the Redbox division can grow profitably even with the studio workarounds in place, but has now removed a significant investor concern with the Warner Bros. deal, he writes. This should provide for an enhanced margin outlook on top of the continued positive marker share shifts within the DVD rental industry. CSTR shares, he says, are extremely attractive at current levels. He thinks they can trade up to the $59-$77 range; the stock closed yesterday at $27.11.

* Michael Pachter, Wedbush: This settlement is a positive step in Coinstar's tense studio relationships, he writes, noting that operating profit is expected to rise by 50 basis points as a result of the deal. He adds that the company should benefit from store closures by Blockbuster and Movie Gallery, and also has tremendous potential to increase price.
http://blogs.barrons.com/techtraderd...oxwarner-deal/
 

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Discussion Starter · #11 ·

Quote:
Originally Posted by moviegeek /forum/post/18153423


I see this as a win for Blockbuster and VOD, we consumers lose.


Netflix never admitted it but I think the studios forced them to stop selling used DVD's.

I think the studios made an offer to Netflix that proved more financially viable than selling used DVDs. Probably a good move considering the rapid decline of physical media prices.


Even Redbox noted that they are getting less and less each quarter for the used DVDs they are dumping on the market.



Re: Blockbuster. I think they will accept a window. They have shown to be wagged by the studios for quite some time. Even before the Redbox (or Netflix) deal they were talking about a kiosk window. With their financial issues (and buy-in into Digital Distribution) they are unlikely to risk any sort of battle with the studios.
 
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