Paramount Says 28 Day Delay On Redbox Makes No Sense; Doesn't Cannibalize DVD Sales

from the good-for-them dept

Wed, Jun 16th 2010 8:53am — Mike Masnick

While some of the Big 6 studios have been incredibly anti-Redbox, Viacom's Paramount has always been the most reasonable towards the DVD-rental kiosk provider. So it really comes as little surprise that Paramount has announced that, after testing delayed movie releases through Redbox it sees absolutely no reason to keep delaying such releases and instead will offer new release movies on Redbox at the same time the DVD goes on sale:

"There were two conclusions we came to," said Dennis Maguire, president of Paramount Home Entertainment. "There hasn't been a cannibalization of DVD sales from Redbox, and Redbox was allowing us to expand our business and ultimately make more money" than if the studio held back its DVDs to Redbox for a period of time.

Of course, this is exactly what many people said when studios like Warner Bros., Universal and Fox demanded the 28 day release, but it's nice to at least see Paramount actually looking at the data and realizing that Redbox isn't the evil destroyer of Hollywood that some of its competitors have made it out to be.

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Filed Under: delays, dvds, rentals
Companies: paramount, redbox, viacom

18 Comments

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DocMenach (profile), 16 Jun 2010 @ 9:03am

Double standard?
So I was at a local grocery store yesterday, and I noticed a $1 DVD rental kiosk. At first I thought it was a Redbox kiosk, but the colors weren't right. I took a closer look, and it was actually a Blockbuster Video rental Kiosk renting DVDs for $1, just like Redbox.

Of course, I think the 28 day delay that the studios have on Redbox is ridiculous, but if they are imposing the delay on Redbox, shouldn't they also be imposing the delay on Blockbuster now too?
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Hephaestus (profile), 16 Jun 2010 @ 9:24am

Ripe for competition ....
"... and receive a percentage of revenue from the rentals, as well as a guaranteed amount of space in each Redbox kiosk for its DVDs.

Redbox estimated that it would pay Paramount $575 million over the life of the agreement."

With the drain in income to RedBox from this deal it makes competition an option. Find out the specifics of the deal, cost per rental, time table if the cost per rental fees are reduced like they are with movie theaters, determine if there is a resale clause in the contract. Then turn around and rent at a price point they can not possibly compete with. Sell the used DVD's to increase your profits.

Failure of RedBox and Failure of blockbuster kiosks in short order.
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imbrucy (profile), 16 Jun 2010 @ 9:28am

Re: Double standard?
They don't because Blockbuster is already paying them extra money from the regular rentals, so they have an incentive to promote Blockbuster and hinder others.
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ChurchHatesTucker (profile), 16 Jun 2010 @ 9:37am

Fuck Hollywood
I was super pissed when my grocery pulled out the DVDPlay kiosk in favor of a crippled Blockbuster kiosk.

Good on Paramount, but I don't keep track of studios and I'm likely going to be pissed when I hit the local Redbox.
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Michael (profile), 16 Jun 2010 @ 9:38am

What really blows my mind is that they actually tested something without just assuming it was bad.
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C, 16 Jun 2010 @ 9:54am

Breaking rank?

Who will be next?

I know Disney will be last :)
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Richard Ahlquist (profile), 16 Jun 2010 @ 9:58am

You want to know what would be hilarious?
It would make me laugh my A$$ off if Blockbuster went out of business and NetFlix and Redbox then refused to release movies from Warner Bros., Universal and Fox until the 28 day period hits. Would serve them right.
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Sam, 16 Jun 2010 @ 10:04am

Re:
Did you read the article? Disney doesn't restrict at all.
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Jay (profile), 16 Jun 2010 @ 10:06am

It's the Prisoner's Dillemma
Now that ONE studio is doing this, I'm sure the others will negotiate their contracts to shorten the distance.

Otherwise, they face people going online and pirating the things rather than Red boxing it.
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Anonymous Coward, 16 Jun 2010 @ 10:07am

Netflix instant streaming ftw
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Hephaestus (profile), 16 Jun 2010 @ 10:10am

Re:
"What really blows my mind is that they actually tested something without just assuming it was bad."

I ignored it thinking this cant be true!! what is this world coming to? Whats next? RIAA doing a study that not going after record labels customers and reducing the price of a music download increases sales.
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btrussell (profile), 16 Jun 2010 @ 10:26am

Re: You want to know what would be hilarious?
"The Wall Street Journal’s Mike Spector reports Blockbuster is seeking $150 million in debtor-in-possession financing from its senior bondholders in case the company files for bankruptcy, while also seeking an outside cash infusion that might keep it out of Chapter 11. Clearly, whatever financing deal it can get will determine whether the company slides into bankruptcy now, or can put it off until later."
http://blogs.bnet.com/business-news/?p=2762

Lets hope it is sooner than later.
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Jason (profile), 16 Jun 2010 @ 10:52am

Re:
But at least Paramount looked at the results and said "It makes no sense". I can appreciate a company that is willing to make a change in things, review the results, and then go and make changes based on reality.
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ChurchHatesTucker (profile), 16 Jun 2010 @ 10:52am

Re: Re:
"Whats next? RIAA doing a study that not going after record labels customers and reducing the price of a music download increases sales"

How does that help the RIAA?

That's the trick, collection societies only profit if they can collect. A lot. From everyone.
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mkam (profile), 16 Jun 2010 @ 11:23am

Re: Double standard?
The blockbuster ones have been showing up around my area too. I haven't been able to confirm but I would expect they are available to supply the movies that Redbox is not allowed. I guess Redbox signed an agreement so it is not a legal issue with the studios controlling the downstream market but it does seem sketchy.
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Hephaestus (profile), 16 Jun 2010 @ 11:26am

Re: Re: Re:
" collection societies only profit if they can collect. "

Yes but by reducing the price they would be increasing sales, making more money.
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ltlw0lf, 16 Jun 2010 @ 5:31pm

Re: Re: You want to know what would be hilarious?
I cancelled my Blockbuster account yesterday. I am tired of paying more for a service that cannot provide the level of service its competitors are providing for less cost. I kept getting broken DVDs, or the wrong DVDs in the mail, and suspected that there is no money any more to actually perform quality of service checks on the merchandise. They obviously fired everyone except for the least paid individuals, and now they are so overworked that they cannot keep up. Sad really.

RedBox and Netflix are cheaper and a better deal.
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R.H. (profile), 16 Jun 2010 @ 9:14pm

Re: Re: Double standard?
The blockbuster one that I've seen in my area had Avatar within the first month so yeah, they don't have the Redbox limitation. I wonder why Redbox played ball with the studios concerning this limitation. What was in it for them?
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