USPTO Rejects Submission Because It Was Faxed 'Upside Down'

Wal-Mart, Target Trying To Block Redbox From Purchasing DVDs?

from the how-nice-of-them dept

Thu, Feb 4th 2010 1:40pm — Mike Masnick

We've described how some film studios are in a huge legal fight with Redbox over DVD rentals. While some studios have come to their senses and are happy to work with Redbox, others have been trying to pressure the company into giving it a cut of rental revenue and/or delaying when it rents newly-released movies. Those studios convinced the big distribution wholesalers to stop selling to Redbox (which seems like a pretty clear restraint of trade or antitrust issue), and in at least one case had convinced retailers not to sell to Redbox. Of course, there are ways around that as well, and we even suggested that Redbox could crowdsource its movie purchasing.

In fact, to get around the studio blocks, Redbox was apparently already purchasing 40% of its DVDs at retail locations like Target and Wal-Mart. But both retailers are now making that more difficult. They've put in place limits directly targeted at Redbox, saying they won't sell more than five DVDs at any one time to any buyer. Yes, here we have a customer willing to buy an awful lot of product -- at full retail price -- and these retailers won't let them? While they claim it's to make sure movies are available for other customers, given the earlier reports of studios specifically asking retailers to block Redbox from buying, it makes you wonder. What sort of company would tell willing customers they can't buy a product that is available and in stock?

Still, in the end I doubt those limits will be very effective. Redbox still could go with that crowdsourced concept, and get its subscribers to purchase five DVDs at a time in exchange for free rentals. Eventually, the industry is going to have to realize that fighting Redbox is a mistake.

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Filed Under: antitrust, dvds, rentals, restraint of trade
Companies: redbox, target, wal-mart

44 Comments

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vastrightwing, 4 Feb 2010 @ 1:52pm

Restraint of Trade
Restraint of trade. Sounds an awful lot like the scenario the book publishers are pulling on Amazon. In one case, book publishers want Amazon not to sell ebooks for a price they want to. It makes no difference that Amazon is paying the wholesaler’s full price. In this instance, Walmart is being asked not to sell movies at their normal retail price to people who buy too many. Next up, manufacturers will be scouting eBay and asking eBay to allow people to sell their products below a certain price. What kind of free market is are headed for? Unbelieveble!
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lavi d (profile), 4 Feb 2010 @ 1:54pm

Glee
Eventually, the industry is going to have to realize that fighting Redbox is a mistake.

The thought of this mindlessly greedy industry - who has had things its own way for so long - waging a doomed battle against technological progress, fills me with joy.
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Corey, 4 Feb 2010 @ 2:15pm

Loss Leader
They use DVDs as a loss-leader to get you into the store. If you but nothing but loss-leaders, and lots of them, then you're costing them money.

Doesn't justify them litigating, but it does explain the action.
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senshikaze (profile), 4 Feb 2010 @ 2:19pm

but, but, but...

there is a Redbox in Wal-Mart and Target! WTF?
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porkster, 4 Feb 2010 @ 2:23pm

Really?
I thought rationing finished at the end of the war.
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The Anti-Mike (profile), 4 Feb 2010 @ 2:23pm

I have no comment on this post either. I will allow me personal troll to quote me out of context from another thread instead.
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Jeff, 4 Feb 2010 @ 2:28pm

Redbox vs. Walmart/Target now?
Pretty sad how the whole industry has changed and went in the opposite of what they used to do. At one time you had to wait to purchase a DVD/VHS of a movie. It seemed the movies ran in theaters first, then for rent months later, then after a few more months they went on sale. Now they want it so that you can buy it before you can rent.
I guess the reason is that the other rental outfits like Blockbuster, Hollywood and such must be giving them a percentage of the rental charges, and that is why you end up paying $4,5,6, to 10 if blueray to rent the movies there.
So along comes redbox renting them at a dollar and whoa, we gotta start selling them now first before rentals to these guys. The reason, is because now we can't price fix the rentals and get a huge cut of the money, so we make it so that they can't rent them because now people will buy them leaving redbox out of the loop.
Just another show of corporate greed! Screw the customer, and make it so they have to take it or else! If anyone tries to offer anything reasonable, we gotta find a way to put them out of business and keep our huge profit margins running!!!
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DS78, 4 Feb 2010 @ 2:35pm

Re: Loss Leader
I disagree. Our Wal-Mart sells new releases just cheaper than the local video store (certainly not at a loss). They also place the new release DVD display near the domestic goods entrance at the front of the store near the registers. That's not typical product placement if you're trying to bait customers to spend money in your store.
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The Buzz Saw (profile), 4 Feb 2010 @ 2:41pm

HAHAHA
Hmmmm... That's easy.

Walk in. Buy 5 copies. Leave store.
Send wife in. She buys 5 copies. Leave store.
Repeat.
???
Profit!
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Derek Bredensteiner (profile), 4 Feb 2010 @ 2:42pm

Re: Loss Leader
Let me make sure I understand this situation.

Wal-Mart and Target sell plastic discs that cost pennies to make for 25 bucks a piece at a loss. And now someone wants to pay them full retail prices and buy more of these plastic discs, so the obvious choice is to just not sell it to them.

Redbox has shown that there is a larger market for entertainment that can be met with increased convenience. So MPAA members, rather than taking any steps to realistically compete with that or taking any steps to embrace that and make money from it, let's just try and kill it. Brilliant.
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Anonymous Coward, 4 Feb 2010 @ 2:44pm

Re: HAHAHA
It's Wal-Mart, you can probably just come back yourself 5 minutes later and succeed.
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The Groove Tiger (profile), 4 Feb 2010 @ 3:02pm

Re:
I am not going to reply to your comment. That you didn't make.
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The Anti-Mike (profile), 4 Feb 2010 @ 3:06pm

Re: Re:
I won't take your non-comment personally.
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Yakko Warner, 4 Feb 2010 @ 3:16pm

Re: Re: HAHAHA
Especially if you use one of those self-checkout lanes.

And if they track it to a credit card? Use cash.
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mjb5406 (profile), 4 Feb 2010 @ 3:22pm

Re:
You beat me to it... not sure about Target, but EVERY Walmart I've gone into has a Redbox. Seems like Walmart wants to have it both ways.
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Anonymous Coward, 4 Feb 2010 @ 3:28pm

I'll preface this with my source: I've been an Electronics Associate for 4 years (late high school to mid college, currently)

Walmart pays roughly $13 per DVD (surprising yet true). On release mornings, we generally lower the price from $20 to $15 (thanks, Mike for doing your research by the way). Its not just Redbox, there are a TON of small rental businesses that come in and buy 10-20 copies at a time. When a store only gets 100-150 copies, and we get 3-4 people buying 20 DVDs at 8AM release morning, we only have a few dozen to sell to customers. I changed my availability to no longer include Tuesday just so I don't have to deal with the headache of customers complaining about us not having the new movies in stock.

Not necessarily defending Walmart, they do have shitty practices, just clearing up some "facts" from the article ;)
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Alan Gerow (profile), 4 Feb 2010 @ 3:30pm

Re: Loss Leader
Best Buy stopped using DVDs as a loss leader a long time ago. New releases used to be about $15-18, now they're $20-25 (closer to or at the MSRP) ... so I believe they stopped using DVDs as a loss leader years ago.
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Alan Gerow (profile), 4 Feb 2010 @ 3:32pm

Re: Re: Re: HAHAHA
You don't need to go that far:

"at any one time to any buyer"

Once you complete the transaction, you have completed your customer experience. You don't even need to leave the store, just turn around, walk back, grab 5 more, and walk back to the register.
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Anonymous Coward, 4 Feb 2010 @ 3:38pm

Re: Re: Re: Re: HAHAHA
nah, the cashiers aren't allowed to do that. You'll be told no, and if you keep trying you'll eventually be asked to leave the store.
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chris (profile), 4 Feb 2010 @ 3:45pm

uh, who still buys dvd's *BESIDES* redbox?
i haven't bought a new DVD for myself in years. i have a couple i have received as gifts that are still in their plastic.

in time, the only customers left buying plastic disks will be the companies that rent them, this really isn't the time to be making enemies out of your primary buyers.
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Yakko Warner, 4 Feb 2010 @ 3:52pm

Re:
Sale restrictions aren't uncommon. It wouldn't surprise me to see a limit one or two per customer on release day.

A permanent sale limit smells of ulterior motives.
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Anonymous Coward, 4 Feb 2010 @ 3:58pm

Re: Re:
The limit is for the first month, it is not indefinite
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John Doe, 4 Feb 2010 @ 3:59pm

Re:
You mean Mike's troll has a troll? Does that make them a sub-troll?
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robin, 4 Feb 2010 @ 4:15pm

Re:
Its not just Redbox, there are a TON of small rental businesses that come in and buy 10-20 copies at a time...

i'm certain walmart knows this full well even at the corporate level. it's called market intelligence, and walmart lives and breathes such information.

very curious why they collapsed vs. the studios instead of turning to these idiots and saying "well, just give us more discs. we'll sell 'em all for you!"

after all, fighting market intelligence is the studios forte, not that of a successful retailer........
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Anonymous Coward, 4 Feb 2010 @ 5:03pm

Re: Re:
It must be the The Anti-Anti-Mike.
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Anonymous Coward, 4 Feb 2010 @ 5:05pm

Re:
On release mornings, we generally lower the price from $20 to $15

That's Walmart's choice. No one's forcing them to do that.

When a store only gets 100-150 copies, and we get 3-4 people buying 20 DVDs at 8AM release morning, we only have a few dozen to sell to customers.

First, I would like to point out that those early morning shoppers are customers, too.

Second, if the stores aren't stocking enough to satisfy demand, maybe they should consider stocking more instead of limiting sales.
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Mr Big Content, 4 Feb 2010 @ 6:00pm

Redbox Are Playing A Dangerous Game
These guys don’t know what they’re getting into. All we have to do is put proximity fuses into those DVDs, uniquely keyed to each SKU. Customers normally only buy one of each title, so they won’t be affected. But put say, 5 or 10 copies of the same title together on a shelf, they reach critical mass, and—BOOM!
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Anonymous Coward, 4 Feb 2010 @ 6:08pm

Re: Re:
I wouldn't know ... I refuse to enter any Walmart
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letherial (profile), 4 Feb 2010 @ 7:31pm

give me any movie i want streamed to my computer for 1.00, until then well...you know.
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Anonymous Coward, 4 Feb 2010 @ 9:12pm

I know this is a longshot, but is it possible (mind you...possible)that movies companies are not the idiots people here invariably characterize them as being. Maybe the companies know something some of the commenters here do not.
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Anonymous Coward, 4 Feb 2010 @ 9:20pm

Re:
Like...what?
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Luci, 4 Feb 2010 @ 9:48pm

Re: Re: Re:
The Anti-Anti Mike would be Mike, and that would me well-reasoned and insightful posts, wouldn't it? You know, the things that got us all here in the first place?
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Pixelation, 4 Feb 2010 @ 11:31pm

Re:
"I know this is a longshot, but is it possible (mind you...possible)that movies companies are not the idiots people here invariably characterize them as being. Maybe the companies know something some of the commenters here do not."

Spoken like a movie company idiot. ;)-
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Mike Masnick (profile), 5 Feb 2010 @ 2:17am

Re:
I know this is a longshot, but is it possible (mind you...possible)that movies companies are not the idiots people here invariably characterize them as being. Maybe the companies know something some of the commenters here do not.

That price fixing and driving alternative distribution forms that they can't control out of business is legal?

Do tell...
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Frankie, 5 Feb 2010 @ 4:22am

Redbox Rocks!
Sorry Walmart/Target, RedBox rocks, so suck it!
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SDDREW, 5 Feb 2010 @ 6:34am

Re: Re: Loss Leader
Um...yeah, that's how you promote something, by placing it right up in front of people walking in the door, and selling it for less than competitors! Loss leaders work to ways:
1 A Customer knows that the cheapest place to get a DVD is at Wal-Mart, so they go there, and heck, they just fought traffic and parking to get there, mine as well pick up some toilet paper and a 5 gal jug of pickels!
2 A Customer walks in, see's the latest release far cheaper than they thought possible, and wonder what other great prices on DVD's they'd actually like to buy, they had back to the movie section and buy other movies that aren't as deeply discounted
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Hephaestus (profile), 5 Feb 2010 @ 6:58am

Restraint of trade.
They should go to the US attorney general's office and ask that charges be filed under the Sherman Anti-Trust Act ...

Oh wait ... the people that work for the US DOJ are all ex RIAA members ... never mind
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Hephaestus (profile), 5 Feb 2010 @ 7:03am

This is a good read
This bit of history reminds me of something .... the Sherman-Anti-Trust-Act
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Killer_Tofu (profile), 5 Feb 2010 @ 7:11am

Re: Redbox Rocks!
"You know what this means?"
"YES, MATT LAUER CAN SUCK IT"
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RIchZ (profile), 5 Feb 2010 @ 7:26am

Re: Re: Loss Leader
I don't know where your Best Buy is, but in the St. Louis, MO area, most DVD's full price is $19.99, and Best Buy sells them for $15.99 or $16.99 Tue-Sat the week of release. They're cheaper at that sale price than anybody locally except Wal-Mart, and you usually can't find the new releases at Wal-Mart, anyway.
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Anonymous Coward, 5 Feb 2010 @ 12:13pm

Re: Re:
Would this be a "per se" or "rule of reason" situation under antitrust law? I ask because you certainly hold a strong view as to the legality of what is/has being/been done.
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Anonymous Coward, 5 Feb 2010 @ 12:18pm

Re: Re: Re: Loss Leader
I always wonder how long until this new video is in the $5 bin. I've seen things land in there in less than three months.
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Overcast (profile), 6 Feb 2010 @ 2:02pm

Eventually, the industry is going to have to realize that fighting Redbox is a mistake.

Indeed; they may just get inventive and take even more business from these shady outfits.
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hegemon13, 12 Feb 2010 @ 12:56pm

Re: Re: Re:
Haha. "Coincidentally," that's how long the studios want Redbox to wait before renting movies. Tell me again that this is not directed at Redbox?
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