Warner lines up with Fox, Uni on kiosk window

[Lee Stewart]

Warner lines up with Fox, Uni on kiosk window

AUG. 13 | PHYSICAL: Studio will sell direct to Redbox, with 28-day title delay

By Susanne Ault -- Video Business, 8/13/2009
AUG. 13 | PHYSICAL: Warner Home Video officially lined up with 20th Century Fox Home Entertainment and Universal Studios Home Entertainment in pushing a later release window for DVD rentals through vending kiosks.

Warner said today that it will sell its titles directly to the kiosk channel, led by Redbox, beginning in October and will offer Warner titles 28 days after their general market release. The studio also will sell directly to the mail-order subscription channel, which Netflix dominates, but Netflix and others in the mail-order rental business will be offered titles at their initial release or with a 28-day window depending on the terms each retailer chooses.

The studio will no longer allow wholesalers to sell to the kiosk or mail-order rental channels.

Warner has a longstanding relationship with Netflix but is believed to be renegotiating its deal under these new terms. “We will evaluate the current proposal and discuss it with them,” said a Netflix spokesman.

“Redbox was informed today that Warner Bros. will take action to limit our consumers’ timely access to new release DVDs,” Redbox president Mitch Lowe said in a statement. “Redbox will continue to stand behind our customers and our commitment to providing convenient, affordable access to new release DVDs from all studios including Warner Bros.”

Warner insists that the choices it’s rolling out for kiosks and mail-order subscription services will advance studio and retail goals.

The studio “will be in discussions with both kiosk and mail-order subscription vendors, offering business options that will allow all parties to grow their respective businesses,” it said in a statement today.

Additionally, Warner is telling wholesalers they they cannot buy or sell any used Warner discs.

Kiosks were largely responsible for an 8.3% growth in consumer spending on movie rentals in the first half of the year, according to Rentrak, while DVD sales fell more than 15%. But some studios fault the kiosks for at least part of DVD sales drop-off. Studios are strongly opposed to kiosks’ $1 pricing and the large volume of used discs they create for sales, both of which the studios believe undercut new DVD sales.

Redbox, which offers $1-per-night DVD rentals through more than 17,000 kiosks in the U.S., is suing both Universal and Fox for alleged antitrust violations after those studios tried to impose 45- and 30-day delays, respectively, on the kiosk operator.

Not all studios oppose Redbox, however. Sony Pictures Home Entertainment and Lionsgate recently signed direct distribution agreements with Redbox for titles to be delivered the same day as their general release. Walt Disney Studios Home Entertainment also sells its titles to Redbox, though not directly, with the provision that it not sell its titles used.

Blockbuster CEO Jim Keyes addressed the Warner announcement in the rental giant’s earnings call with analysts today. Though Blockbuster is on track to have 500 Blockbuster Express kiosks deployed by partner NCR by the end of the month and 2,500 by end of the year, Keyes agreed with Warner’s tactic, calling it “complementary to Blockbuster’s multichannel approach.”

“For Blockbuster, it represents a competitive opportunity” because between Fox, Universal and Warner, 60% of new releases will have a delayed release window for kiosks, he said. Translation: Big Blue would rather have customers pick up a higher-priced rental in its stores than a $1-per-night DVD, even from its own kiosks.

“One dollar for viewing is not a sustainable industry model,” Keyes said.

http://www.videobusiness.com/article...?desc=topstory

Srudio war!

[ack_bak]

Wow. Just wow. This could put Redbox out of business......

Netflix has got to be worried if the studios start cracking down on cheaper rentals..

And this sucks for consumers BTW. These studios are some greedy bastards....

[Rich86]

Ah yes - entertainment industry greed at full throttle - call the lawyers - they probably need a new B'mer or 2 anyway . . . .
Of course all the folks who rent from redbox are going to run out and buy those DVDs at day 1 retail prices rather than wait a month to rent it for $.99. Yeah - right . . .
I still think these are just posturing positions for revenue sharing negotiations. Redbox is making money hand over fist - and the movie studios want more of it for themselves - beyond the sale price of the titles themselves.

[Malanthius]

Originally Posted by ack_bak

Wow. Just wow. This could put Redbox out of business......

Netflix has got to be worried if the studios start cracking down on cheaper rentals..

And this sucks for consumers BTW. These studios are some greedy bastards....

Ok..... but can you blame them? They want you to buy the movies. Not just rent them. Oh that's right. People are not changing their habits and everything is business as usual with movie sales.

[Rich86]

Originally Posted by Malanthius

Ok..... but can you blame them? They want you to buy the movies. Not just rent them. Oh that's right. People are not changing their habits and everything is business as usual with movie sales.

Actually, they'd like it even more if we bought the movies, stored them and paid them every time we watched them besides . . . . anyone remember that little scam a small herd of lawyers talked Circuit City into backing? BD-Live becomes BD-ChargeYourCreditCard . . .
btw - I'm rooting for Redbox!

[ack_bak]

Originally Posted by Malanthius

Ok..... but can you blame them? They want you to buy the movies. Not just rent them. Oh that's right. People are not changing their habits and everything is business as usual with movie sales.

Where did I say that? You stated that people were no longer buying movies and I pointed out the obvious. That movie sales generate more revenue than rentals do. Please prove me wrong......

Can I blame the studios? Yes. They are greedy. Does this affect me? No. My local Redbox does not carry Blu-Ray...

[Lee Stewart]

Blockbuster Q2 loss narrows 12%

AUG. 13 | PHYSICAL:U.S. same-store sales fall 17.8% on inventory, games

By Danny King -- Video Business, 8/13/2009
AUG. 13 | PHYSICAL: Blockbuster trimmed its fiscal 2009 second-quarter loss by 12% from a year earlier, as the largest U.S. movie-rental chain cut inventory and advertising costs to comply with a $250 million refinancing agreement it completed in May. U.S. same-store sales fell 17.8% on both the lower inventory and a drop in videogame sales. The company also backed Warner Home Video's decision to push a later DVD release window for vending kiosks even as it expands its partnership with NCR to almost 10,000 Blockbuster Express kiosks over the next year.

“We temporarily changed our strategy to manage the business for cash, not growth,” said Jim Keyes, CEO of Blockbuster, in a conference call with analysts today. “We must be realistically conservative about the remainder of this year.”

Blockbuster’s net loss for the quarter ended July 5 narrowed to $36.9 million, or 21¢ a share, from a loss of $41.9 million, or 23¢, a year earlier, the company said in a statement today. Sales dropped 22% to $1.02 billion. Blockbuster was expected to lose 12¢ a share on sales of $1.12 billion, the average analyst estimate in a Thomson Reuters survey.

The company was able to narrow its loss by cutting costs quickly enough to account for the drop in sales. The company’s cost of sales was 45% of revenue, down from 50% a year ago. Strategies such as the testing of one-day rental pricing at some stores were curtailed because the lower rates cut profit, Keyes said.

Blockbuster said in March that it would try to reduce costs for at least the early part of this year on items such as retail inventory and capital expenditures. Such cost-cutting measures were to be part of the retailer’s effort to cut its debt by about $100 million to comply with the new $250 million refinancing agreement, which extends a line of credit more than a year past its previous due date of August 2009 and was finalized May 11.

Between its positive cash flow, sales of some of its overseas assets, renegotiation of its store leases and closures of underperforming stores, the company is trying to cut its debt by about $400 million within the next two years. Blockbuster Chief Financial Officer Tom Casey said today that the company continues talks with debt- and equity-holders over potential ways to cut its cost of capital, while Keyes spoke of an "anticipated sale of an international asset" without providing further detail.

Blockbuster will accelerate the closure of its standard 5,000-square-foot stores and open more smaller, 2,500-square-foot units as it develops its Blockbuster Express kiosks with partner and ATM-making giant NCR in its effort to challenge Coinstar's Redbox division, the largest U.S. kiosk operator. NCR will deploy 500 Blockbuster Express kiosks by the end of the month, 2,500 units by the end of the year and as many as 9,500 within the next 12 months, Keyes said today. Blockbuster has about 7,100 stores worldwide, down from about 7,600 a year ago.

Still, Keyes supported Warner Home Video's decision today to follow the lead of Universal Studios Home Entertainment and 20th Century Fox Home Entertainment by enforcing a 28-day delay on new release delivery to rental kiosks because the window helps Blockbuster's brick-and-mortar stores.

"We're not sure it's in our best interests to have day and date" for kiosks, Keyes said, adding that the $1-a-day rental rate by Redbox "is not a sustainable industry model."

Blockbuster’s results reflect a U.S. home entertainment market in which consumers cut spending for the first half of the year by 3.9% from a year earlier, according to DEG: The Digital Entertainment Group. DVD rental was up 6% overall, however that represents a slight 2% decline in bricks-and-mortar and online channels more than offset by more than 150% growth in kiosk rentals, according to Rentrak.

Additionally, videogame sales have dropped as more gamers look to save money by playing free online games instead of buying new titles. Blockbuster's same-store retail sales plunged 38% from a year earlier largely on declining sales of videogame hardware and software.

http://www.videobusiness.com/article/CA6676732.html

[furriballs]

How does this even relate to Blu ray? Or high definition for that matter? Nowhere in the article did I see mention of Blu ray. Just dvd. And what's the smackdown? Just saying.

[ack_bak]

Originally Posted by furriballs

How does this even relate to Blu ray? Or high definition for that matter? Nowhere in the article did I see mention of Blu ray. Just dvd. And what's the smackdown? Just saying.

This is going to hurt DVD more than Blu-Ray IMHO, but this is pretty big news IMHO and should be debated.

Redbox must have their lawyers scrambling. And I hope Redbox wins... This sounds like a cartel....

[Lee Stewart]

Originally Posted by furriballs

How does this even relate to Blu ray? Or high definition for that matter? Nowhere in the article did I see mention of Blu ray. Just dvd. And what's the smackdown? Just saying.

1. Many people are anxious to have Redbox carry BD titles in their area. BD will be included in any of these studio demanded delays. Redbox has said nothing about buying BD's at retail as they have with Uni and Fox and now probably WB DVD's

2. WB is changing their deal with Netflix. You don't think BD isn't included?

[furriballs]

Originally Posted by ack_bak

This is going to hurt DVD more than Blu-Ray IMHO, but this is pretty big news IMHO and should be debated.

Redbox must have their lawyers scrambling. And I hope Redbox wins... This sounds like a cartel....

What's to debate? The studios don't have to sell anything to Redbox, or anyone else, if they don't want to. I don't believe there's a law saying that Fox or WB has to sell discs to Redbox. Now if they have a contract, that's different.

Still don't see anything smacki-down about this, but I'm sure some will find a way to tie it to Blu ray and its demise.

[recmasters]

Originally Posted by furriballs

How does this even relate to Blu ray? Or high definition for that matter? Nowhere in the article did I see mention of Blu ray. Just dvd. And what's the smackdown? Just saying.

You do notice its former supporters making up the majority of posts in this thread, most likely they jumped in hoping it was bad news for , not much of that around lately

[recmasters]

Originally Posted by Lee Stewart

1. Many people are anxious to have Redbox carry BD titles in their area. BD will be included in any of these studio demanded delays. Redbox has said nothing about buying BD's at retail as they have with Uni and Fox and now probably WB DVD's

2. WB is changing their deal with Netflix. You don't think BD isn't included?

Wait... I thought was Niche?

[GizmoDVD]

Originally Posted by furriballs

What's to debate? The studios don't have to sell anything to Redbox, or anyone else, if they don't want to. I don't believe there's a law saying that Fox or WB has to sell discs to Redbox. Now if they have a contract, that's different.

Still don't see anything smacki-down about this, but I'm sure some will find a way to tie it to Blu ray and its demise.

I agree with all of this. What right does Redbox (or any other rental place) have to get the studios to sell them discs? I mean, I guess they could go buy them on release day and stick them in their boxes...but what forces them to make the studios give them product?

[furriballs]

Originally Posted by recmasters

You do notice its former supporters making up the majority of posts in this thread, most likely they jumped in hoping it was bad news for , not much of that around lately

Surely that would never happen around here.

More blah, blah, blah and lots of speculation. We have a few Redbox locations here where I live, and believe me, I'd never rent anything from them. The locations that they are springing up in aren't anywhere I'd want to go, and I don't fancy getting mugged while waiting on a disc to pop out of a machine in some skanky, dimly lit entrance way to a Walmart.