Home > Vulture News > Studios Win, Consumers Lose In Warner Bros. Settlement With Redbox

Studios Win, Consumers Lose In Warner Bros. Settlement With Redbox

WARNER_BROS_REDBOX

When Sony signed a five year deal with Redbox in July, Sony Home Video president David Bishop said:

Our consumers have always been the best barometer of where our business needs to go, and clearly Redbox has become an important distribution option.

That attitude proved to be the exception to the norm. With DVD sales starting to go the way of the CD, Hollywood studios desperation to avoid the music industry’s flameout has resulted in a united show of force against Redbox and online downloading. Warner Bros. led the pack and was the first to institute a 28 day waiting period before Redbox could acquire any of its new releases. The rest of the studios followed suit, forcing Redbox to purchase new releases directly from retailers like Walmart.

Coinstar Inc., the company that owns and operates Redbox filed a lawsuit against Warner Bros. in October and, last week, a deal was made in order to avoid having the case go to court. Based on the terms of the agreement, Redbox will honor the 28 waiting period for all Warner Bros. new releases. The settlement represents a major victory for the studios in the long and protracted legal battle they’ve waged to fight declining DVD profits. Warner Bros Home Entertainment Group president, Kevin Tsujihara, said in a statement:

The 28-day window enables us to get the most from the sales potential of our titles and maximize (video on demand) usage

Warner Bros. is counting on the fact that higher cost options will become more popular, although that may be wishful thinking. As the the music industry learned, once a convenient, lower cost business model has been created, consumers aren’t inclined to go back to the previous one.

[Reuters]

Categories: Vulture News