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Redbox, Warner Bros. headed to war over new DVD delay

mikemorel
01-07-2012, 07:24 AM
Redbox, Warner Bros. headed to war over new DVD delay (http://latimesblogs.latimes.com/entertainmentnewsbuzz/2012/01/redbox-warner-bros-dvd-delay.html)

However, Redbox will wait no longer than 28 days to rent discs, interim President Gregg Kaplan said in an interview this fall. A spokeswoman confirmed Friday that the company's position has not changed.

That means the $1-per-night kiosk company will no longer be able to get discs directly from Warner Bros. but will have to buy them in bulk from retail stores. Redbox did the same thing in 2010 when the parties were in a similar fight. Illinois-based Redbox ultimately agreed to the 28-day delay.

The new policy, expected to be announced next week at the Consumer Electronics Show in Las Vegas, is to take effect Feb. 1, the day after Warner Bros.' current deals with Netflix and Redbox expire.

It's also expected to extend to the nation's third-largest rental outlet, Blockbuster.

[Updated, 2:18 p.m., Jan. 6: A person familiar with the thinking of executives at Blockbuster said it too will not accept the 56-day delay and will buy Warner Bros. DVDs through alternative means.]
I posted this in the 56 day embargo thread. But it may get buried there...

It appears Redbox and Blockbuster have not yet agreed to Warner Bros. 56 day embargo. Warner was going to make the announcement of a 56 day delay without agreements in place?

mikemorel
01-07-2012, 09:04 AM
AllthingsD (who broke the 56 day embargo story):

Hollywood Showdown: Blockbuster, Redbox Balk at Warner’s New Window (http://allthingsd.com/20120106/hollywood-showdown-blockbuster-redbox-balk-at-warners-new-window/)

Warner Bros. wants to keep its DVDs out of the hands of renters for an extra month. Blockbuster and Redbox don’t want to play along.

Which means we’re in for an interesting game of chicken between Time Warner’s movie studio and the two rental services. And the result will be meaningful for Netflix, too.

Here’s where things stand: Warner Bros wants to double the “window” that keeps new new DVDs away from rental services from 28 days to 56 days, a strategy that’s supposed to encourage would-be renters to buy DVDs instead. Netflix intends on going along with the plan, and will be able to buy discs directly from the studio at wholesale rates.

Warner plans on announcing the new terms next week at the Consumer Electronics Show. But though I reported yesterday that Dish Network’s Blockbuster and Coinstar’s Redbox had signed on, the two companies — directly and indirectly — say that’s not the case. Earlier today a Coinstar rep told me the company won’t agree to a longer window, and person familiar with Blockbuster’s thinking now says the same same thing.

If neither side backs down, then Blockbuster and Redbox would have a marketing advantage over Netflix, since the companies could boast about getting new movies before their rival.

But that assumes they can get their hands on the movies. That will be costly, and perhaps quite difficult.

In the past, Redbox has bought movies directly from retailers (Netflix also used to do the same thing in the service’s early days. But chains like Wal-Mart and Target have instituted buying caps on their discs that’s supposed to thwart that strategy. (Thanks, Janko Roettgers.)

Grab your popcorn!

Revised original story from AllthingsD (http://allthingsd.com/20120105/warner-brothers-will-make-netflix-redbox-blockbuster-wait-longer-for-new-movies/):

UPDATE: Coinstar is now commenting, via email. “The current agreement Coinstar has with Warner Bros. is to receive movie titles 28 days after their release. No revised agreements are in place.” The company’s current deal with Warner Bros. expires at the end of January; PR chief Marci Maule referred me to comments CEO Paul Davis made last fall about pursuing “workarounds” if studios try to extend their windows.

GizmoDVD
01-07-2012, 09:50 AM
FYI - Blockbuster has been buying titles at retailers anyway. Some studios refuse to said the business any stock so managers are getting checks in the mail to go buy titles which they "trade in" and turn into stock.

mikemorel
01-07-2012, 10:18 AM
FYI - Blockbuster has been buying titles at retailers anyway. Some studios refuse to said the business any stock so managers are getting checks in the mail to go buy titles which they "trade in" and turn into stock.You talking about Blockbuster Kiosks (i.e. NCR), Blockbuster-By-Mail, or BB stores?

What "managers" are getting checks, and from who?

PSound
01-07-2012, 10:31 AM
This is going to be fun to watch.

I was actually surprised when Redbox agreed to the 28 day delay since their model is so dependent on new releases.


This could be very painful to both companies. Painful to Redbox because it will cost them more to acquire WB discs, and painful to WB because Redbox is going to flood the used market with WB discs a few weeks after release.

mikemorel
01-07-2012, 10:48 AM
This is going to be fun to watch.Drama on the high seas, in real time.

I was actually surprised when Redbox agreed to the 28 day delay since their model is so dependent on new releases.It makes one wonder about their rumored hookup with Verizon for streaming video.

Verizon And RedBox Planning Major Partnership For Early 2012 Launch (http://techcrunch.com/2011/12/07/verizon-and-redbox-planning-major-partnership-for-early-2012-launch/)


This could be very painful to both companies. Painful to Redbox because it will cost them more to acquire WB discs, and painful to WB because Redbox is going to flood the used market with WB discs a few weeks after release.Who knows - They may come to agreement before Feb 1st, when the embargo goes into effect.

Universal's contract with Redbox and Netflix is until April 1st. Fox has 28 day delay until April, 2013.

mikemorel
01-07-2012, 10:49 AM
Strange, that Warner was going to announce 56 day delay, without contracts in place with Redbox and BB.

GizmoDVD
01-07-2012, 10:57 AM
You talking about Blockbuster Kiosks (i.e. NCR), Blockbuster-By-Mail, or BB stores?

What "managers" are getting checks, and from who?

B&M.

I've posted the info before (either here or on that other forum).

http://www.ihateblockbuster.com/forum/showthread.php?t=11669
So does anybody on here know what is going on with the movies set to release this week and next? I heard that the SMs once again have to go out and buy 30 Minutes and Idiot Bro tomorrow and Smurfs, Friends/Benefits Friday and Hangover2 next week. With the exception of H2, none of these titles are Warner Bros-they are Columbia and Weinstein. So are we having issues with more studios now?

bruceames
01-07-2012, 10:58 AM
Netflix would be much less affected because they don't operate any kiosks (and there's usually a long delay anyway for popular new releases that are available on day one), so that's why they signed the agreement. Actually I was surprised to read that Redbox agreed to it, and now it appears to be false, so that makes more sense.

Blockbuster, except for the kiosks, is a living dinosaur. I'm glad that they won't be given preferential treatment anymore.

GizmoDVD
01-07-2012, 11:06 AM
Blockbuster is pretty much dead. This is really the final nail for them if they can't get product within 56 days. That also means their very lucrative 'sell it used after x days', will get delayed as well.

mikemorel
01-07-2012, 11:13 AM
Blockbuster, except for the kiosks, is a living dinosaur. I'm glad that they won't be given preferential treatment anymore.I'm wondering if the Blockbuster mentioned in the stories is the Kiosk Blockbuster (NCR) or the B&M Blockbuster (Dish), or both.

GizmoDVD
01-07-2012, 11:16 AM
I'm wondering if the Blockbuster mentioned in the stories is the Kiosk Blockbuster (NCR) or the B&M Blockbuster (Dish), or both.

Well studios already delay (or don't send at all) to Blockbuster.

PSound
01-07-2012, 11:49 AM
This may or may not be over.

Remember that one of the big concerns for studios was the used disc market created by kiosks. The shelf life for kiosk discs are relatively short and without studio agreements, Redbox has to resell the old discs in order for it to work financially.

Consumers pick up on stuff pretty quickly and if it becomes clear that they can pick-up title for $10 3-4 weeks after release, it will further erode spending on new releases. And it will impact the entire sell through ecosystem (including the value of EST).

bruceames
01-07-2012, 12:01 PM
This may or may not be over.

Remember that one of the big concerns for studios was the used disc market created by kiosks. The shelf life for kiosk discs are relatively short and without studio agreements, Redbox has to resell the old discs in order for it to work financially.

Consumers pick up on stuff pretty quickly and if it becomes clear that they can pick-up title for $10 3-4 weeks after release, it will further erode spending on new releases. And it will impact the entire sell through ecosystem (including the value of EST).


How many used discs would be available? There about 5000 Redbox kiosks, aren't there? How many of an average new release would they stock?

It just seems that it's not going to be this big flood of used discs. And if they sell for $10, that's not going to be an easy sell, considering that by the time it's available for sale, then it'll probably be discounted new at retail as well.

PSound
01-07-2012, 12:24 PM
How many used discs would be available? There about 5000 Redbox kiosks, aren't there? How many of an average new release would they stock?

It just seems that it's not going to be this big flood of used discs. And if they sell for $10, that's not going to be an easy sell, considering that by the time it's available for sale, then it'll probably be discounted new at retail as well.

28,000 kiosk locations in the US, each holding up to 630 discs.

http://www.redbox.com/facts


And the used market was a big concern for the studios. That is why everyone eventually made deals with Redbox, even for day/date release. Not every studio thinks that day/date at Redbox is a negative, but every studio believes that used Redbox discs flooding the market IS a negative.

Lee Stewart
01-07-2012, 12:48 PM
Redbox will still have to deal with the retailer invoked buying caps as to how many discs they can buy at a single store. This will put a damper on their efforts. Now if Best Buy sees the opportunity that they could sell a whole bunch of discs to Redbox, that could change the equation.

GizmoDVD
01-07-2012, 01:05 PM
Redbox will still have to deal with the retailer invoked buying caps as to how many discs they can buy at a single store. This will put a damper on their efforts. Now if Best Buy sees the opportunity that they could sell a whole bunch of discs to Redbox, that could change the equation.

Whomever fills the Redbox will simply buy at multiple stores.

They will get around it. Blockbuster clearly does.

mikemorel
01-07-2012, 06:12 PM
Whomever fills the Redbox will simply buy at multiple stores.

They will get around it. Blockbuster clearly does.Strange.

From the article:

However, Redbox will wait no longer than 28 days to rent discs, interim President Gregg Kaplan said in an interview this fall. A spokeswoman confirmed Friday that the company's position has not changed.Redbox says "we have a 28 day contract - as far as we know, nothing has changed." Sounds like Redbox was not even contacted by Warner.

Updated, 2:18 p.m., Jan. 6: A person familiar with the thinking of executives at Blockbuster said it too will not accept the 56-day delay and will buy Warner Bros. DVDs through alternative means.If what you and others are saying is correct, then BB was always buying WB titles through "alternative" means.

Earlier today a Coinstar rep told me the company won’t agree to a longer window, and person familiar with Blockbuster’s thinking now says the same same thing.Those are not prepared remarks.

Coinstar is now commenting, via email. “The current agreement Coinstar has with Warner Bros. is to receive movie titles 28 days after their release. No revised agreements are in place.”Nothing about negotiations breaking down, no spin whatsoever.

I am left with the distinct impression that Warner hadn't even talked to Blockbuster or Redbox, much less held negotiations.

Lee Stewart
01-07-2012, 07:55 PM
Strange.

From the article:

Redbox says "we have a 28 day contract - as far as we know, nothing has changed." Sounds like Redbox was not even contacted by Warner.

If what you and others are saying is correct, then BB was always buying WB titles through "alternative" means.

Those are not prepared remarks.

Nothing about negotiations breaking down, no spin whatsoever.

I am left with the distinct impression that Warner hadn't even talked to Blockbuster or Redbox, much less held negotiations.

Then it sounds to me that WB has used the media to proclaim their intentions and what they are looking to get when their contract expires at the end of this month.

If WB refuses to sell to the rentailers, IMO, they open themselves up to an antitrust lawsuit. That was what Redbox was using against the studios before it agreed to the 28 day delay. A judge had already ruled that Redbox had grounds for an antitrust lawsuit:

Redbox Antitrust Case Can Proceed Against Universal, Federal Judge Says

http://www.fastcompany.com/blog/clay-dillow/culture-buffet/redbox-antitrust-case-can-proceed-against-universal-federal-judge-sa

GizmoDVD
01-07-2012, 09:36 PM
Strange.

From the article:

Redbox says "we have a 28 day contract - as far as we know, nothing has changed." Sounds like Redbox was not even contacted by Warner.

If what you and others are saying is correct, then BB was always buying WB titles through "alternative" means.

Those are not prepared remarks.

Nothing about negotiations breaking down, no spin whatsoever.

I am left with the distinct impression that Warner hadn't even talked to Blockbuster or Redbox, much less held negotiations.

BB has been buying Warner and other studios titles for some time now. The link I provided has plenty of proof from many stores that this is going on.

mikemorel
01-10-2012, 02:22 PM
Warner Bros. Home Entertainment To Make New Release DVD And Blu-ray Titles Available For Rental Only After 56-Day Sales-Only Window (http://www.dailymarkets.com/stock/2012/01/10/warner-bros-home-entertainment-to-make-new-release-dvd-and-blu-ray-titles-available-for-rental-only-after-56-day-sales-only-window/)

LAS VEGAS, Jan. 10, 2012 /PRNewswire/ — Warner Bros. Home Entertainment Group and Netflix, Inc. today announced a new agreement that will extend the current 28-day sales-only window to 56 days for Theatrical New Release and made-for-video titles on DVD and Blu-ray Disc.

“Since we implemented a 28-day window for subscription and kiosk, we have seen very positive results with regard to our sell-through business,” said Mark Horak, president, Warner Home Video North America. “One of the key initiatives for Warner Bros. is to improve the value of ownership for the consumer and the extension of the rental window – along with our support of UltraViolet – is an important piece of that strategy.”

Warner Bros. is balancing its home entertainment revenue streams by creating different times at which a product is available at different prices. A staggered schedule allows the Studio to maximize the sales potential of its theatrical new release titles and VOD offerings.

“Netflix wants to ensure members have continued secure access to Warner Bros. DVDs and Blu-ray discs and, as such, is accepting the 56 day holdback,” said Netflix Vice President of Content Anna Lee.

The new agreement was announced at the annual Consumer Electronics Show in Las Vegas, Nev. in conjunction with an annual event held by the Digital Entertainment Group.

About Warner Bros. Home Entertainment Group

Warner Bros. Home Entertainment Group (WBHEG) brings together Warner Bros. Entertainment’s home video, digital distribution, interactive entertainment/videogames, direct-to-DVD production, technical operations and anti-piracy businesses in order to maximize current and next-generation distribution scenarios. WBHEG is responsible for the global distribution of content through DVD, electronic sell-through and transactional VOD, and delivery of theatrical content to wireless and online channels, and is also a significant worldwide publisher for both internal and third party videogame titles.

About Netflix

With more than 20 million streaming members in the Americas, the United Kingdom and Ireland, Netflix, Inc. [Nasdaq: NFLX] is the world’s leading internet subscription service for enjoying films and TV programmes. For about US$7.99 a month, Netflix members can instantly watch unlimited films and TV episodes streamed over the internet to PCs, Macs and TVs. Among the large and expanding base of devices streaming from Netflix are the Microsoft Xbox 360, Nintendo Wii and Sony PS3 consoles; an array of Blu-ray disc players, internet-connected TVs, home theatre systems, digital video recorders and internet video players; Apple iPhone, iPad and iPod touch, as well as Apple TV and Google TV. In all, more than 700 devices that stream from Netflix are available. For additional information, visit www.netflix.com. Follow Netflix on Facebook and Twitter.

chipvideo
01-10-2012, 02:43 PM
Wasn't universal the one that had the highest home video revenue this year beating out Warner?

Lee Stewart
01-12-2012, 01:13 PM
Redbox: No Revised Warner Deal in Place

He said Redbox, which operates more than 40,000 kiosks in 27,000 locations, is heavily invested in offering new releases on street date — a reality it could not afford to risk going forward. Wold expects Redbox — if confronted with a 56-day embargo — to push through a workaround program obtaining Warner titles through alternative sources, including big box retail.

The analyst said Redbox has spent the past two years perfecting just such a strategy and is better prepared to implement it than it was two years ago when confronted by studio embargoes for the first time.

“We continue to expect Coinstar to reject such a change for Redbox and, instead, implement a long-term replacement workaround strategy,” Wold wrote in a Jan. 11 note. “In our opinion, this remains the smarter move for the company.”

http://www.homemediamagazine.com/redbox/redbox-no-revised-warner-deal-place-26106