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