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Redbox, Warner Agreement Ends

Lee Stewart
01-31-2012, 10:21 AM
Redbox, Warner Agreement Ends

Redbox has vowed to continue stocking DVDs and Blu-ray Discs from Warner Home Video through “alternative means,” after an agreement to acquire movies directly from the studio expired Jan. 31.

On Jan. 10 Warner Bros. Home Entertainment Group said it was implementing a 56-day embargo on new release titles, beginning with Netflix, which agreed to the new retail window.

Redbox’s agreement with Warner delayed new release titles for 28 days, but with that agreement expired, consumers now can expect Warner new release titles in the kiosks on street date, a Redbox spokeswoman said

In other Redbox news, Walmart has agreed to host Redbox’s DVD kiosks at more than 3,700 locations through January 2015, the companies announced Jan. 31.

Redbox kiosks have been in Walmart Stores since 2006.

http://www.homemediamagazine.com/redbox/redbox-warner-agreement-ends-26273

:yippee:

jkkyler
01-31-2012, 10:24 AM
+1,000,000 :thumbsup:

PSound
01-31-2012, 10:39 AM
This is going to be interesting to watch!

:thumbsup:

Cygnus
01-31-2012, 10:48 AM
Finally a company is not putting up with that delay none sense! Netflix should take note

GizmoDVD
01-31-2012, 11:14 AM
LOL at Warner. Good job, Redbox.

bruceames
01-31-2012, 11:19 AM
Good luck making a profit on those Redbox. Now that Warner is doing flippers, they're only getting one disc for their $20. After figuring overhead, purchasing costs (including the time and gas spent to buy those discs, perhaps at multiple retailers due to buying limits), how many one day rentals at $1.20 will it take to break even?

Redbox operators may consider them loss leaders.

Lee Stewart
01-31-2012, 11:21 AM
Good luck making a profit on those Redbox. Now that Warner is doing flippers, they're only getting one disc for their $20. After figuring overhead, purchasing costs (including the time and gas spent to buy those discs, perhaps at multiple retailers due to buying limits), how many one day rentals at $1.20 will it take to break even?

1. Do you have any evidence that WB is going to use the flipper for all their new releases? Has there been any releases other then that 1 comedy?

2. Rebox does have the choice not to offer the movie at all.

bruceames
01-31-2012, 11:23 AM
1. Do you have any evidence that WB is going to use the flipper for all their new releases? Has there been any other releases other then that 1 comedy?

2. Rebox does have the choice not to offer the movie at all.


No evidence Lee, just a hunch. ;) :hithere: WB is at war with Redbox now, so I think they will go there.

So you think Redbox will be stocking only 'profitable' new WB releases? If so, they may not be stocking very many...

chipvideo
01-31-2012, 11:24 AM
You go Redbox!!!

Netflix really doesn't have a choice, because they want to get streaming content for cheap. Redbox OTOH will live and die by new release material. That is their bread and butter.

I am glad they didn't make a deal with the devil. So for catalog we have netflix that will have the largest library of movies known to man for rental and redbox for $1.50 a day bd rentals. Sounds good to me!!! I have 10 redboxes within a 3 mile radius of me.

Lee Stewart
01-31-2012, 11:24 AM
No evidence Lee, just a hunch. ;) :hithere:

IMO - a bad hunch. A flipper is a lot more expensive to manufacturer then just adding a DVD.

Lee Stewart
01-31-2012, 11:27 AM
No evidence Lee, just a hunch. ;) :hithere:

So you think Redbox will be stocking only 'profitable' new WB releases? If so, they may not be stocking very many...

I don't believe they would stock a flipper. Too much can go wrong (consumer end) and the expense involved.

Redbox does not stock all new movies. They stopped doing that. If a movie bombs at the theaters - why carry it in your limited space kiosk? If they movie stinks in the theaters - guess what - it's going to stink at home to. :lol:

bruceames
01-31-2012, 11:29 AM
IMO - a bad hunch. A flipper is a lot more expensive to manufacturer then just adding a DVD.

I guess we'll see, won't we? :gamer

If flippers are so much more expensive than two discs, then why did WB and Universal use them so much back in the early and middle years of DVD? ;)

bruceames
01-31-2012, 11:34 AM
I don't believe they would stock a flipper.

I'm sure Warner would be just fine with that. Let Redbox stock the DVDs only, which BTW will probably soon see their own street delay on a regular basis (like POTC4). Warner has cards to play, they're not helpless.

Lee Stewart
01-31-2012, 11:35 AM
I guess we'll see, won't we? :gamer

If flippers are so much more expensive than two discs, then why did WB and Universal use them so much back in the early and middle years of DVD? ;)

They were used in the early years of DVD because they had not perfected the manufacturing process of dual layer discs. Then they decided that they could have a flipper dual layer disc to offer P & S on one side and LTBX on the other. MGM used to do that.

Lee Stewart
01-31-2012, 11:38 AM
I'm sure Warner would be just fine with that. Let Redbox stock the DVDs only. :lol:

WB is kidding themselves if they think they control consumers.

"pride goeth before the fall"

PSound
01-31-2012, 11:40 AM
I'm sure Warner would be just fine with that. Let Redbox stock the DVDs only, which BTW will probably soon see their own street delay on a regular basis (like POTC4). Warner has cards to play, they're not helpless.

That is why I think this is going to be fun to watch.

Redbox is going to hurt Warner by dumping discs on the used market.

Warner is going to battle Redbox by making it difficult for them to obtain discs in the first place, and maybe even by tweaking VOD prices to make that a more attractive alternative over Redbox.


Get out the popcorn!

bruceames
01-31-2012, 11:43 AM
They were used in the early years of DVD because they had not perfected the manufacturing process of dual layer discs. Then they decided that they could have a flipper dual layer disc to offer P & S on one side and LTBX on the other. MGM used to do that.


So why did Universal use so many DVD-18s on their TV shows and multi-movie SKUs? Because they were more expensive?

Lee Stewart
01-31-2012, 11:49 AM
So why did Universal use so many DVD-18s on their TV shows and multi-movie SKUs? Because they were more expensive?

What timeframe are you talking about?

bruceames
01-31-2012, 11:50 AM
WB is kidding themselves if they think they control consumers.

"pride goeth before the fall"

Are you kidding? Hollywood has enormous control over consumers. There is probably no larger cultural influence in the world. Hollywood is what America is known for around the world.

Besides, WB is going after Redbox, not the consumer. Do you think WB is powerless over what Redbox can do with their movies?

bruceames
01-31-2012, 11:51 AM
What timeframe are you talking about?


I'd guess 2002-2007.

Lee Stewart
01-31-2012, 12:01 PM
Are you kidding? Hollywood has enormous control over consumers. There is probably no larger cultural influence in the world. Hollywood is what America is known for around the world.

Cultural influence is not control. He who holds the gold makes the rules and CONSUMERS hold the gold - not Hollywood. Hollywood makes and sells a product. Consumers have to buy that product for Hollywood to make money. No sale - no money. THAT is how you determine who holds the leash and who gets dragged along by it.

Besides, WB is going after Redbox, not the consumer. Do you think WB is powerless over what Redbox can do with their movies?

Yep - called 1st Sale Doctrine. If that doesn't work - as in WB wants to try to influence retailers from not doing business with Redbox - Redbox just hauls WB into court again. They already have been approved by a judge on their former Anti-Trust Lawsuit.

Lee Stewart
01-31-2012, 12:02 PM
I'd guess 2002-2007.

I'll get back to you on that question. Need to find out how many titles were issued on DVD-18s and see if I can find sales data for said titles.

bruceames
01-31-2012, 12:18 PM
Yep - called 1st Sale Doctrine. If that doesn't work - as in WB wants to try to influence retailers from not doing business with Redbox - Redbox just hauls WB into court again. They already have been approved by a judge on their former Anti-Trust Lawsuit.

So, are releasing flippers that Redbox doesn't want while delaying the DVD SKU powerless maneuvers? Or delaying the BD as well and releasing it digitally?

Like I said, WB isn't powerless and has cards. And they have given signs that they're ready to play them all.

bruceames
01-31-2012, 12:25 PM
That is why I think this is going to be fun to watch.

Redbox is going to hurt Warner by dumping discs on the used market.

Warner is going to battle Redbox by making it difficult for them to obtain discs in the first place, and maybe even by tweaking VOD prices to make that a more attractive alternative over Redbox.


Get out the popcorn!

That will have minimal effect. Redbox won't dump them while they're still worth renting, and by the time they're not, the vast majority of sell-through sales will have occurred and the title will be ready for a retail price drop anyway.

Plus Redbox will be helping Warner's cause by inflating the retail sell-through figures in the first place, that WB so desperately wants. Go Redbox! :D

Lee Stewart
01-31-2012, 12:27 PM
So, are releasing flippers that Redbox doesn't want while delaying the DVD SKU powerless maneuvers? Or delaying the BD as well and releasing it digitally?

Like I said, WB isn't powerless and has cards. And they have given signs that they're ready to play them all.

LOL - WB can do whatever they want - it definitely doesn't mean they will be successful at it or have you forgotten the $29.95 Premium VOD fiascio?

So far, WB stands alone. Not a good position to be in when there are many other competitors looking for consumer HV dollars.

There are plenty of other movie releases on a weekly basis that consumers can view besides WB releases. Or they can skip movies and just spend more time on Facebook or Twitter.

PSound
01-31-2012, 12:27 PM
Both Warner and Redbox have weapons at their disposal.

The biggest one for Redbox is killing the tail of Warner releases by flooding the market with discs a few weeks after release. That will impact Warner top-line.

Warner can make it expensive for Redbox to acquire and stock discs, but Redbox will get the discs earlier when their customers want them. That will boost Redbox top line and negatively impact Redbox bottom line.

Going to be fun to watch!

FYI, here is a good article discussing this:

Looks like Redbox has told Warner Bros to take a hike with its effort to double the waiting period for new rental DVDs to 56 days. When the contract to acquire discs directly from Warner Bros expires today Redbox will “work to provide Warner Brothers’ movies through alternative means,” says Gary Cohen, SVP for marketing and customer experience. He adds that Redbox “maintains direct working relationships with every other major studio.” Disney, Paramount, and Sony provide new DVDs to Redbox the day they’re released; Universal and Fox require the kiosk company to wait 28 days. Redbox is taking a big risk by choosing to buy Warner Bros discs from outside sources: That could be more costly. What’s more, the company may not be able to buy enough copies of hit films to satisfy its customers — especially if Warner Bros can persuade retailers to cap the number of the studio’s discs they’ll sell to a single customer. (Earlier this morning Walmart agreed to continue housing Redbox kiosks to early 2015.) But Warner Bros also is taking a gamble: There’s nothing to stop Redbox from flooding the market with used Warner Bros DVDs a few weeks after they’re released, when rental demand for the titles lets up.

http://www.deadline.com/2012/01/redbox-vows-to-acquire-warner-bros-dvds-through-alternative-means/

PSound
01-31-2012, 12:30 PM
That will have minimal effect. Redbox won't dump them while they're still worth renting, and by the time they're not, the vast majority of sell-through sales will have occurred and the title will be ready for a retail price drop anyway.

Plus Redbox will be helping Warner's cause by inflating the retail sell-through figures in the first place, that WB so desperately wants. Go Redbox! :D

I disagree with the "minimal effect" assertion.

Preventing used discs from flooding the market is critical. Indeed, I can think of no other reason for studios to make any deal with Redbox as the model hurts every other aspect of the Home Video chain.

The only way that Redbox could be worse for studios without a contract is when they DO flood the market with used discs effectively killing any tail a title might have.

bruceames
01-31-2012, 12:31 PM
The biggest one for Redbox is killing the tail of Warner releases by flooding the market with discs a few weeks after release. That will impact Warner top-line.


No it won't. Redbox will be paying top dollar for those discs from the beginning, and the net effect of that plus selling them after the movie sales have plummeting and possible street price erosion is at best a wash and more likely a net gain for WB.

bruceames
01-31-2012, 12:33 PM
I disagree with the "minimal effect" assertion.

Preventing used discs from flooding the market is critical. Indeed, I can think of no other reason for studios to make any deal with Redbox as the model hurts every other aspect of the Home Video chain.

The only way that Redbox could be worse for studios without a contract is when they DO flood the market with used discs effectively killing any tail a title might have.


So if that affect isn't 'minimal', then neither is the affect of Redbox paying street prices on Warner's behalf. Which is it?

PSound
01-31-2012, 12:38 PM
No it won't. Redbox will be paying top dollar for those discs from the beginning, and the net effect of that plus selling them after the movie sales have plummeting and possible street price erosion is at best a wash and more likely a net gain for WB.

Each and every disc that Redbox buys will be consumed by multiple households.

Let me say that again:

Each and every disc that Redbox buys will serve the demand to see the title for multiple households day/date with the discs release.

And after each single disc satisfies the need for multiple households to see the movie (for $1.20), that disc will be released into the market to serve the need for someone to own the film, likely for right around $7... $7 of which Warner gets not a dime.


Bruce: If you were correct about the net impact of not doing a deal with Redbox, then no studio would have a deal with Redbox. Not only is that not the case, but there are studios who have day/date deals with Redbox. The only benefit to those studios is the destruction of discs after the rental lifecycle vs those disc killing sales a few weeks after release.

GizmoDVD
01-31-2012, 12:55 PM
If each discs Redbox squires essentially kills 2 sales, this will be a bad thing for Warner.

chipvideo
01-31-2012, 05:21 PM
Are you kidding? Hollywood has enormous control over consumers. There is probably no larger cultural influence in the world. Hollywood is what America is known for around the world.

Besides, WB is going after Redbox, not the consumer. Do you think WB is powerless over what Redbox can do with their movies?

Obviously not by looking at the OD sales decline over the last 7 years in a row. :banana::banana::banana:

Kosty
01-31-2012, 05:36 PM
I disagree with the "minimal effect" assertion.

Preventing used discs from flooding the market is critical. Indeed, I can think of no other reason for studios to make any deal with Redbox as the model hurts every other aspect of the Home Video chain.

The only way that Redbox could be worse for studios without a contract is when they DO flood the market with used discs effectively killing any tail a title might have.

You are overestimating the number of discs needed to service the inventory of the kiosks. For prominent titles its a fraction of new release physical sales as rental inventory can have many turns and there are not that large of number of kiosks compared to new release sales.

By the time the titles go on sale after rental use they are old news and if they were bought at retail there were counted as new release physical sell through sales anyway.

The real impact of rental inventory would not be in the sales of old stale in used inventory but in its use as rental transactions with many turns and this makes it more expensive to get that inventory.

Even if Redbox has a great system to buy at retail, its still retail sales that cost more and are unlikely to be in the quantities used in the studio supplied 28 day delay agreements.

mikemorel
01-31-2012, 05:47 PM
Variety:

Redbox won't accept Warner Bros. disc delay (http://www.variety.com/article/VR1118049531)

Kiosk operator will instead buy DVDs at retail

By Marc Graser

As expected, Redbox isn't agreeing to Warner Bros.' new 56-day delay to offer new film rentals.
Earlier this month, the studio inked a new distribution deal with Netflix, expanding a previous 28-day deal to a longer frame, in exchange for discounts on discs for new releases.

However, after lengthy talks between WB and Redbox this month, the companies couldn't come to an agreement over the new demands from the studio.

Instead, Redbox has opted to turn to "alternate means" to purchase the films on DVD and Blu-ray it makes available to rent for as low as $1.20 a night through its more than 28,000 kiosks -- and offer them the same day they hit store shelves to buy, according to Redbox senior VP of marketing Gary Cohen.

First WB title to bow in kiosks the same day as retail will be "A Very Harold & Kumar Christmas," out Feb. 7.

Placed mostly in supermarkets and outside convenience stores, Redbox also said Tuesday that Walmart will continue adding kiosks its 3,700 stores through January 2015.

While other studios like Paramount say that making discs available in kiosks at the time of relese doesn't affect disc sales, Warner Bros. has stuck to its guns in believing that longer windows will encourage more people to purchase discs and store them in UltraViolet's cloud-based digital lockers or rent them on VOD.

Although Blu-ray sales are increasing, they haven't made up for declining DVD revenue. Last year, the sale of all discs fell 13%, generating nearly $9 billion, primarily because of slower DVD sales, according to the Digital Entertainment Group.

On the rental side, kiosks, operated by Redbox and other vendors, showed the most growth in the rental category, up 31% to collect $1.7 billion in fees, prompting studios to look for ways to grab a larger share of that increased revenue.

After Redbox revealed that it has ended talks with Warner Bros., the studio stressed in a statement: "The consumer is best served by a windowing and pricing structure that ensures a healthy film business continuing to deliver quality movies. We hope to continue discussions with Redbox and reach a mutually agreed upon solution to this situation, but we fully intend to do what is best for our business, our consumers and the industry as a whole."

Since the delay, Warner Bros. has found that the 28-day window has also helped boost sales for DVDs and Blu-rays by as much as 32% at retailers like Best Buy, especially during the first four weeks after they go on sale.

During this year's Consumer Electronics Show in Las Vegas, Warner Home Video North America prexy Mark Horak said, "Since we implemented a 28-day window for subscription and kiosk, we have seen very positive results with regard to our sell-through business. 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."

Redbox will now begin talks with Universal over the renewal of its own terms with that studio (a 28-day delay), which expires in April.

PSound
01-31-2012, 06:02 PM
You are overestimating the number of discs needed to service the inventory of the kiosks. For prominent titles its a fraction of new release physical sales as rental inventory can have many turns and there are not that large of number of kiosks compared to new release sales.

By the time the titles go on sale after rental use they are old news and if they were bought at retail there were counted as new release physical sell through sales anyway.

The real impact of rental inventory would not be in the sales of old stale in used inventory but in its use as rental transactions with many turns and this makes it more expensive to get that inventory.

Even if Redbox has a great system to buy at retail, its still retail sales that cost more and are unlikely to be in the quantities used in the studio supplied 28 day delay agreements.

Back in the day before studio deals, Redbox was selling titles at $7 each as soon as two weeks after release.

Do you think consumers are not going to notice that trend and have it impact purchases?

That is one hell of a depreciation level. I don't know many folks who think the premium is worth it if they can get the disc 2-3 weeks later for 1/3 of the price.

Again... This is why so many studios made deals with Redbox.

mikemorel
02-03-2012, 11:25 AM
NPD Group blog:

CES 2012: Window Dressing (http://www.npdgroupblog.com/2012/01/ces-2012-window-dressing/#more-1571)

The thinking is that if the movie isn’t available to rent, then we’ll buy it, either in physical format or though some form of electronic sell through. Windowing also encourages retailers to support key titles, which is a point not to be dismissed lightly.

The argument is whether scarcity, and by extension windowing, matters to consumers in today’s movie retail environment. NPD’s research shows that over 90 percent of renters would not consider acquiring a new release movie any other way. For them a window will have little effect. On the other hand, if it does move a few consumers to actually purchase the movie, that is a win for the industry — a 2 or 3 percent lift in unit sales at higher margins makes an important contribution.I'm thinking a 2-3 percent lift is not an important contribution at this point.

Lee Stewart
02-03-2012, 11:33 AM
NPD Group blog:

CES 2012: Window Dressing (http://www.npdgroupblog.com/2012/01/ces-2012-window-dressing/#more-1571)

I'm thinking a 2-3 percent lift is not an important contribution at this point.

Hey Mike, OD sales revenue doesn't mean much to a studio's bottom line. It's all cost and risk for new movies. We were told this just recently by an expert. :rolleyes:

chipvideo
02-03-2012, 11:42 AM
OD sales are all profit to the studios bottom line. Its like printing money. Its extra free money that already had the expenses subsidized out from the theatrical run. This is why Hollywood is in major Trouble. OD sales are falling off a cliff and that money is needed to fund other projects.

Lee Stewart
02-03-2012, 11:51 AM
OD sales are all profit to the studios bottom line. Its like printing money. Its extra free money that already had the expenses subsidized out from the theatrical run. This is why Hollywood is in major Trouble. OD sales are falling off a cliff and that money is needed to fund other projects.

Not really Chip - that only happens when a movie either breaks even or makes more then it's cost+marketing in the theaters. For many movies, OD revenue can change their financial status from either lost money to lost less money or lost money to made money.

The biggest money makers for studios are the revenue they are paid for licencing fees and advertising fees from television.

mikemorel
02-15-2012, 02:57 PM
Redbox Prepared To Sidestep Universal Or Fox If They Want Longer DVD Rental Delay (http://www.deadline.com/2012/02/redbox-prepared-to-sidestep-universal-or-fox-if-they-want-longer-dvd-rental-delay/)

The kiosk company already buys Warner Bros discs on the open market instead of accepting the studio’s insistence that it wait 56 days for new releases. And Paul Davis, CEO of Redbox parent Coinstar, says he’s “comfortable that we could deal with” a similar situation if Universal or Fox also try to change their current arrangement to hold new releases for 28 days before selling discs directly to Redbox. The kiosk company says it offsets the higher price it pays retailers for Warner Bros’ new DVD and Blu-ray releases by carrying fewer of the studio’s titles. “We’re not buying every single movie” from Warner Bros,” he told analysts at the Pacific Crest Emerging Technology Summit. ”We’re pretty selective.” The company expects to “learn a lot more as we go through the quarter” about how many discs to buy to satisfy consumers and still make a profit. Although Redbox is prepared to do the same thing with Universal and Fox, Davis says “I don’t believe that’s where we’ll end up.”

Davis remained mum about the details of Redbox’s new video streaming venture with Verizon. He says that their national subscription service, which will launch in the second half of this year, will offer consumers “the best of both worlds, both physical and digital.” The CEO noted, though, that about 20% of Redbox’s kiosk customers also subscribe to Netflix. He also offered little new about the pending deal to buy the Blockbuster Express kiosk business from NCR. It will add more than 9,000 machines to the 35,400 that Redbox currently manages. If antitrust officials approve the acquisition, then all of the kiosks would operate as a single network under the Redbox brand. “From a consumer standpoint it will be seamless,” Davis says.

He adds that he’s not worried about the reports showing that consumers are losing interest in discs, especially as digital movie streaming and downloading become more popular. DVDs are “still a high percentage of how consumers rent movies and we project it will last for a good while,” Davis says. Redbox isn’t just keeping its fingers crossed. Although it expects to add as many as 6,000 kiosks this year, ”we continue to tick that (expansion number) down.” Meanwhile the company is diversifying with its recent efforts to add video games to the mix at kiosks — and joining Verizon in streaming and downloads.

Lee Stewart
05-09-2012, 10:08 PM
Coinstar CFO: Redbox Open to 'Conversations' With Warner

Redbook said it is willing to sit down with Warner Home Video and iron out differences regarding the studio’s 58-day embargo of new-release titles to the kiosk vendor, the CFO of parent Coinstar told an investor group.

Speaking May 9 at the D.A. Davidson Financial Services Conference in Bellevue, Wash., CFO Scott Di Valerio said Redbox would revisit the embargo issue surrounding Warner’s intent to double a previous 28-day delay of new-release titles on street date. Warner’s distribution agreement with Redbox expired earlier this year and renewal talks were abandoned after the studio said it wanted to lengthen the embargo — a move it did with physical rentals to Netflix.

Instead, Redbox initiated a workaround program for a planned 10 to 13 Warner titles this year. The strategy now finds Warner titles in a majority of Redbox’s 38,000 kiosks nationwide seven days after street date, with higher stock available thereafter, according to Di Valerio.

Redbox has day-and-date contracts with Lionsgate/Summit Entertainment, Sony Pictures Home Entertainment and Paramount Home Media Distribution. It has 28-day deals with 20th Century Fox Home Entertainment and Universal Studios Home Entertainment. The kiosk vendor remains on a title-by-title basis with Walt Disney Studios Home Entertainment, although the studio is now talking about going to a 28-day delay, according to Di Valerio.

*SNIP*

http://www.homemediamagazine.com/redbox/coinstar-cfo-redbox-open-conversations-warner-27206

Lee Stewart
05-24-2012, 01:40 AM
Coinstar SVP: Warner Has ‘Different View of the World’

23 May, 2012
By: Chris Tribbey

Getting new-release DVDs to the consumer as quickly as possible is Redbox’s No. 1 priority, according to Galen Smith, SVP of finance for parent company Coinstar.

That’s why Redbox won’t budge on the Warner Bros.’ demand that new-release titles be delayed at rental 56 days after street date, he said.

“Studio relationships are very important to us, but we’re always balancing that with what’s best for our business, and ultimately what’s best for the consumer,” Smith said, speaking at the Morgan Stanley Retail Conference in Boston on May 23. “With Warner, there’s simply a different view of the world, where they want to have this on a longer delay than we think is right for either our business or our consumers.”

Since its DVD and Blu-ray Disc agreement with Warner ended Jan. 31 — an agreement that had new-release titles on a 28-day delay — Redbox has been paying retail prices to stock Warner Home Video new releases and stocking them in kiosks within seven days of street date. Redbox still has new-release titles from 20th Century Fox Home Entertainment and Universal Studios Home Entertainment on a 28-day delay, and day-and-date contracts with Lionsgate/Summit Entertainment, Sony Pictures Home Entertainment and Paramount Home Media Distribution.

The quicker turnaround on Warner titles in kiosks is resulting in higher margins per disc, due to incremental turns on rentals, Smith said, but he admitted that Redbox is leaving “some revenue on the table” because Redbox isn’t always able to secure all the copies it wants.

“But it’s also going to be more profitable because you’re not over-buying a particular title,” he said.

Coinstar CFO Scott Di Valerio said May 9 that the company is open to going back to the negotiating table with the studio. Smith said Redbox would spend anywhere between $800 million and $1 billion in 2012 on studio content, and wanted to stress that Redbox “can be an important source of value to the studios.”

Warner contract or not, Redbox is in great shape, Smith said, evidenced by a 40% jump in first-quarter revenue and a 38.5% market share of the physical disc rental market.

“Our store is 12 square feet,” Smith said. “We represent, today, 2% of the square footage that’s there for physical rental, and yet we had 34% of the [physical disc] units rented last year. It’s a nontraditional approach. We think that for the foreseeable future, we’ll be able to drive consumer behavior to rent from us, and grow that share. We think physical has a much longer life than the rest of the world thinks.”

In regard to Blu-ray, Smith said Redbox “got a little bit ahead of ourselves” and demand in terms of how many discs it was stocking in kiosks.

“We then pulled back and found more of a balance,” he said.

Smith also touched on the joint streaming and DVD rental venture with Verizon, which is set to launch by August. The joint venture gets Redbox into the streaming business and will allow Verizon to provide its digital content distribution platform, Verizon Digital Media Services, beyond its fiber-optic FiOS TV subscriber base of 4 million.

“What I appreciate with the Verizon team is they had a real vision on what our physical footprint and product can provide,” Smith said. “The ability to provide new releases to consumers in a value-centric and convenient way was something that they really latched on to. [The partnership] will combine physical new releases at the kiosk with additional [subscription] VOD content.”

Earlier in the day, Fran Shammo, EVP and CFO for Verizon, said the joint venture will help with content negotiations for FiOS, and will help improve margins in terms of how much Verizon pays for content per subscriber.

“As we negotiate our new content deals, we’re also bringing in the Redbox joint venture into that discussion, so as we build on our subscribers to the Redbox joint venture, that will lower our content costs,” he said.

Shammo noted that FiOS is available in 13 states, and the Redbox partnership will help Verizon expand its service.

“It benefits us,” he said. “It was an offensive play, but it was also a defensive play against other providers.”

http://www.homemediamagazine.com/redbox/coinstar-svp-warner-has-different-view-world-27349

Lee Stewart
10-25-2012, 04:10 PM
Redbox, Warner Sign Kiosk Distribution Deal

Redbox and Warner Bros. Home Entertainment Oct. 25 announced a multiyear agreement to bring the studio’s new-release Blu-ray Disc and DVD movies to Redbox kiosks 28 days after their retail release dates.

The agreement marks an end to contentious relationship between Warner and Redbox, a situation that found the kiosk vendor circumventing the studio and its distribution partners to acquire its new releases on street date. Redbox had no deal to buy titles directly from Warner, while Netflix, the other heavyweight in the rental sector, gets them only after 56 days.

Redbox also said it plans to join the Digital Entertainment Content Ecosystem (DECE) and has agreed to promote UltraViolet through a program of mutually agreed-upon promotions and marketing tactics designed to help retail customers discover UltraViolet.

“For the past 10 years, Redbox has been committed to giving consumers affordable access to new-release entertainment,” Redbox SVP Galen Smith said in a statement. “This new agreement continues this commitment and represents an exciting new chapter in our relationship with Warner, and an opportunity to explore our consumers’ interest in UltraViolet.”

The agreement begins with Warner titles with street dates from Jan. 1, 2013, through Dec. 31, 2014. The arrangement is designed to improve the economics for both Warner and Redbox while ensuring consistent availability of the studio’s titles for the consumer.

Heretofore, Redbox had been acquiring Warner titles through alternative means — a situation exacerbated by Time Warner CEO Jeff Bewkes’ insistence that low-margin distribution channels such as kiosks and Netflix undermined the sellthrough business.

“This deal is a win-win,” said Ron Sanders, president, Warner Home Video. “In addition to improved financials for both Warner Bros. and Redbox, the arrangement allows Redbox to satisfy consumer demand for our product. We also have the opportunity to promote UltraViolet at Redbox kiosks and grow consumer awareness of the benefit and ease of use of digital products and services.”

Separately, Warner Bros. Home Entertainment inked a deal with Redbox Instant by Verizon, the joint venture of Redbox and Verizon set to launch later this year, which plans to offer digital movies together with the convenience and value of Redbox DVD and Blu-ray Disc rentals.

This agreement will make Warner titles available in VOD and electronic sellthrough formats and allow Redbox Instant by Verizon to support and distribute Warne’s UltraViolet-enabled movies. The deal also covers a multiyear SVOD agreement supporting feature-length content.

“This agreement fits perfectly with Redbox Instant by Verizon's vision for bringing people the movies that matter, wherever and whenever they choose, using the devices and media they prefer, at home or away,” said Shawn Strickland, CEO of Redbox Instant by Verizon.

“We look forward to working with Verizon and Redbox to offer consumers a wide selection of great content that can be enjoyed, whether buying or renting, on a variety of devices, and in any format that fits their individual preferences,” said Thomas Gewecke, president of Warner Bros. Digital Distribution. “We are also pleased to have a new, direct relationship with the Verizon and Redbox joint venture to ensure their customers have consistent access to our movies.”

The news comes as Redbox parent Coinstar reported third-quarter revenue of $537.5 million for the three months ended Sept. 30, up from $465.6 million during the same quarter in 2011. The company saw its profit down slightly to $36.8 million, down from $37.1 million during the same quarter in 2011.

Redbox revenue — including revenue from the recently acquired NCR kiosks — grew 17.9% during the quarter to $459.5 million. Total rentals for the quarter were 176.4 million, down from 177.9 million. Blu-ray rentals represented 9% of rental volume, and 10.5% of Redbox revenue.

Nearly 4,000 new kiosks were added during the quarter, and Redbox reported its physical disc rental market share jumping 9.4% to 44.1%overall.

Redbox executives pointed to 23% fewer new theatrical releases and people staying home for the Olympics as part of the reason for the lower profit.

Regarding the launch of Redbox Instant by Verizon, thecompany said content for the service is being acquired, and a test among 500 employees has been concluded, with a beta trial expected to commence “in the coming week.”

Regarding expansion into Canada, Redbox had 270 kiosksinstalled there by the end of the quarter.

For the fourth quarter, Redbox is looking at The Avengers, The Dark Knight Rises,
That’s My Boy, The Amazing Spider Man, The Expendables 2, The Campaign, Men In Black 3, Brave, Total Recall, The Watch and Arthur Christmas to all perform well.

“In the third quarter, Coinstar delivered 16% year-over-year revenue growth and solid bottom line results,” said Coinstar CEO Paul Davis. “Redbox revenue increased 18% despite temporary headwinds from the new release schedule and Olympics that negatively impacted rentals. We are optimistic regarding the future of Redbox and are focused on key Redbox growth initiatives, including extending the footprint in the U.S. and expanding into Canada, as well as our digital offering with Redbox Instant by Verizon.”

http://www.homemediamagazine.com/rental/redbox-warner-sign-kiosk-distribution-deal-28679

bruceames
10-27-2012, 11:32 AM
I always figured the Warner was using the 56 day embargo as a ploy to make the 28 day embargo seem more reasonable and thus acceptable.

bruceames
10-27-2012, 11:36 AM
Redbox revenue — including revenue from the recently acquired NCR kiosks — grew 17.9% during the quarter to $459.5 million. Total rentals for the quarter were 176.4 million, down from 177.9 million. Blu-ray rentals represented 9% of rental volume, and 10.5% of Redbox revenue.

Nearly 4,000 new kiosks were added during the quarter, and Redbox reported its physical disc rental market share jumping 9.4% to 44.1%overall.

Hmm, the DEG report has it up 9.86% (http://www.highdefforum.com/1283964-post4.html).

Interesting to see that overall Redbox rentals are down, in spite of having added 4,000 kiosks. Looks like people aren't using their kiosks as much as they used to. I see a lot of red buggy whips in the next few years.

Lee Stewart
10-28-2012, 09:45 AM
Redbox revenue — including revenue from the recently acquired NCR kiosks — grew 17.9% during the quarter to $459.5 million. Total rentals for the quarter were 176.4 million, down from 177.9 million. Blu-ray rentals represented 9% of rental volume, and 10.5% of Redbox revenue.

Hmmmmmmmmm

bruceames
10-28-2012, 10:53 AM
Hmmmmmmmmm

Could the difference be that gaming rental revenue is included? :confused:

EDIT: Then again, a 17.9% increase to $459.5 million means that the Q3 2011 figure is $428.7 million. The DEG Report has Q3 2011 Kiosk revenue at $414.0, so that's where the main difference lies.

Lee Stewart
10-28-2012, 12:10 PM
Could the difference be that gaming rental revenue is included? :confused:

EDIT: Then again, a 17.9% increase to $459.5 million means that the Q3 2011 figure is $428.7 million. The DEG Report has Q3 2011 Kiosk revenue at $414.0, so that's where the main difference lies.

I was commenting on the low percentage that BD rentals have for Redbox's total revenue:

Blu-ray rentals represented 9% of rental volume, and 10.5% of Redbox revenue.

bruceames
10-28-2012, 12:22 PM
I was commenting on the low percentage that BD rentals have for Redbox's total revenue:

Yeah, that is pretty low. I had thought it was already around 10% by the end of last year.

GizmoDVD
10-28-2012, 12:23 PM
Redbox doesn't really stock a whole bunch of Blu-rays IMO.

Lee Stewart
10-28-2012, 12:34 PM
So I guess it's mainly Blockbuster (D-b-M and B&M) and Netflix who are renting BDs?

JerryDandridge
10-28-2012, 03:08 PM
So I guess it's mainly Blockbuster (D-b-M and B&M) and Netflix who are renting BDs?

Family Video has about 760 stores, and carries a pretty good selection of BD's

jkkyler
10-28-2012, 03:30 PM
Redbox doesn't really stock a whole bunch of Blu-rays IMO.

They carry a good number in the ones by me I would estimate 35%-40% day and date releases have a blu-ray). I read an article tyhat talked about how initially they overstocked blu-rays and saw rental numbers go down so they scaled back and are trying to adjust it based on rental trends