Redbox Realizing That Caving To Hollywood On 28-Day Delay Was A Bad Idea

from the duh dept

Fri, Jan 14th 2011 1:23pm — Mike Masnick

We were pretty surprised when Redbox caved in to the Hollywood studios, and agreed to annoy its customers with a ridiculous 28-day delay. We had many commenters say that people wouldn't care and it wasn't much of a big deal. However, the company is now admitting that the 28-day delay resulted in much lower holiday rentals than it had expected. Meanwhile, the only studio that has publicly released information about how its experiments with the 28-day delay went, Paramount, has said that such delays are bad for business, as it doesn't increase sales of DVDs, and that allowing Redbox to rent movies sooner actually helped the studio (and Redbox) make more money. So why do we still have those delays?

Thank you for reading this Techdirt post. With so many things competing for everyone’s attention these days, we really appreciate you giving us your time. We work hard every day to put quality content out there for our community.

Techdirt is one of the few remaining truly independent media outlets. We do not have a giant corporation behind us, and we rely heavily on our community to support us, in an age when advertisers are increasingly uninterested in sponsoring small, independent sites — especially a site like ours that is unwilling to pull punches in its reporting and analysis.

While other websites have resorted to paywalls, registration requirements, and increasingly annoying/intrusive advertising, we have always kept Techdirt open and available to anyone. But in order to continue doing so, we need your support. We offer a variety of ways for our readers to support us, from direct donations to special subscriptions and cool merchandise — and every little bit helps. Thank you.

–The Techdirt Team

Filed Under: delays, movies, rentals
Companies: paramount, redbox

49 Comments

If you liked this post, you may also be interested in...

Reader Comments

Subscribe: RSS

View by: Time | Thread

Killer_Tofu (profile), 14 Jan 2011 @ 1:05pm

Kids and Candy Bars
So why do we still have those delays?

I believe it goes back to psychological experiments that were mentioned here awhile back. You take two kids. Tell one he can have half of a candy bar, OR he can have a full size candy bar if another kid also gets a full size one. Most kids chose the lesser, because they didn't want somebody else getting anything from their decision. While I do not remember the specifics of the study that was the general idea.

That seems to be the studio's problem (both for movies and music really). They can't stand the idea that somebody else might possibly make money off of the content, even if it helps them out. The people in control are just too greedy. That (the greed) would also explain their odd sense of entitlement for new technologies, youtube, and anything else that might help them out but they fight it because they aren't getting a cut even though they never made an effort to do anything (or when they do it was very poorly executed). Also might explain their fuzzy accounting systems they have set up to screw artists (for music) or claim tons of losses when a movie is made (the movie studios habit of having one company another hundreds of millions in consulting so its a loss far more often then not).

Or we could just use Hanlon's razor and say they are just that darn stupid.
[ link to this | view in thread ]
A Dan (profile), 14 Jan 2011 @ 1:33pm

According to the Yahoo News article I read
"That said, Universal, Fox, and Warner Brothers seem to be pretty happy with their kiosk embargoes, arguing that the delays have kept bargain-priced kiosk rentals from undermining DVD and Blu-ray sales � and indeed, movie execs are so happy with the results that they've been hinting at extending the new-release window to as long as 90 days."
[ link to this | view in thread ]
A Dan (profile), 14 Jan 2011 @ 1:34pm

Re: According to the Yahoo News article I read
http://news.yahoo.com/s/yblog_technews/20110114/tc_yblog_technews/are-28-day-delays-for-new-releases -hurting-redbox
[ link to this | view in thread ]
Scott (profile), 14 Jan 2011 @ 1:38pm

PPV perhaps?
DirecTV makes a big deal about them showing movies the day they hit DVD on the PPV channels - "Can't get it through the mail or at that kiosk in the store" is their advertisement.

Possibly the movie companies have a contract with DTV and others for this?
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 1:41pm

Re: Re: According to the Yahoo News article I read
Oh Dan, don't confuse the debate by trying to clear up the FUD.

I saw the same report today on CNBC. The movie industry people are generally very happy with the results, and the decline in Coinstar's rental business clearly indicates that they were nabbing rentals during a key period. As soon as they aren't in that period, their rentals tank. Thus, there is demand, and that demand could potentially support a higher price (supply and demand at work).

But hey, that doesn't support the TD view of the universe. You better be quiet before someone tells you to "grow up".
[ link to this | view in thread ]
Mike Kelly, 14 Jan 2011 @ 1:43pm

I could comment intelligently if I had the ability to see things the way these studio executives do. But I dont think I can get my head that far up my ass.
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 1:44pm

Why still have those delays? So Blockbuster Express, satellite, and cable TV commercials can brag how they have movies 28 days sooner than Netflix or Redbox. I'm so sick of hearing those too.
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 1:45pm

Re:
I still subscribe to Netflix too. The movie studios can suck it.
[ link to this | view in thread ]
Steve R. (profile), 14 Jan 2011 @ 1:46pm

Restraint of Trade?
Seemingly not illegal, a deal between two companies to limit product to customers would be inconsistent with free market principles. Yes you can have exclusive contracts, such as a manufacturer selling to a specific retailer. Nevertheless, to have two companies collude to to restrict the sale of a product is excessive. Free markets are about competition, not collusion.

When companies collude to set prices, that is considered illegal. Colluding to restrict sales, may have crossed the imaginary line-in-the-sand into illegality.
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 1:52pm

Re: Re: Re: According to the Yahoo News article I read
And that's how piracy was ultimately defeated. The end.
[ link to this | view in thread ]
fogbugzd (profile), 14 Jan 2011 @ 1:53pm

Lots of reasons
I can think of three reasons that the studio execs like the 28 day delay.

1) They are probably getting a cash payment of some kind from the immediate release companies like Blockbuster. It is always hard to give up an existing income stream, even if giving it up opens up the option to make much more money elsewhere.

2) Like Charlie Brown, managers like to manage. They think they are doing something, and things like this can make impressive entries on a resume or vitae.

3) Executives have fed themselves on myths about the industry and now they have a hard time giving them up. The "we make more money because we have release windows" is going to be a hard one to loose. It is much easier to ignore the Paramont data or come up with reasons that it doesn't apply to their own studio because it would call the whole windowing paradigm into question.
[ link to this | view in thread ]
johaus (profile), 14 Jan 2011 @ 1:54pm

Removing customer options is never a smart choice
Whoever "wedbush" and Michael Pacther are, Redbox would not be benefited by listening to their advice:

"On Redbox's Blu-ray woes on the quarter, Pachter offered up a solution: "Those selecting Blu-ray should be shown only Blu-ray titles, and those selecting standard definition should be shown only standard definition." Currently, Redbox lets users browse Blu-ray and DVD titles at the same time."

This "analyst" thinks the solution to sales problem is limiting customer choice? He doesn't think customers would realize that they are seeing less/different titles when they choose Blu-ray? The current system is the best for the customers, they get to see all of the choices available, and then they can choose if they want to pay the extra 50� a day for the Blu-ray option. Rebox also benefits because they can start getting metrics on what types of titles people are willing to pay the Blu-ray premium for; something the studios might find interesting as well.

Or another option is for the myopic studios to not charge more for Blu-Ray, which would likely result in a higher uptake for that underwhelming technology.
[ link to this | view in thread ]
johaus (profile), 14 Jan 2011 @ 1:58pm

Re: Re: Re: According to the Yahoo News article I read
You missed the whole point of the posting, i.e., Redbox is regretting its decision - whether or not the release windows benefit the studios or that demand can support a higher price is irrelevant.

The point is Redbox should not have caved. Its goals are not benefited by yielding to studio demands; demands which remain questionable in regards to the first sale doctrine and studio collusion.
[ link to this | view in thread ]
PW (profile), 14 Jan 2011 @ 2:03pm

Collusion?
Given Paramount's comments one would have to wonder why they wouldn't just change their deal w/Redbox on their own. I'm going to guess that there must be some collusion here that keeps them from acting independently of the other large studios.
[ link to this | view in thread ]
A Dan (profile), 14 Jan 2011 @ 2:03pm

Re: Re: Re: According to the Yahoo News article I read
I think a 90-day delay for Redbox would completely kill the company. I think it was directly counter to their interests to cave on the 4-week delay. They should have ignored the studios and routed around them, and that may be exactly what happens when this deal runs out. We'll find out soon enough, I suppose.
[ link to this | view in thread ]
The Mighty Buzzard (profile), 14 Jan 2011 @ 2:11pm

Re: Re: Re: According to the Yahoo News article I read
Mostly, with such exacting points of data as "pretty happy" and "bad for business", I'd just like some freaking numbers. Not cherry picked, narrow statistics either. Raw data that I can crunch myself.
[ link to this | view in thread ]
The eejit (profile), 14 Jan 2011 @ 2:11pm

Re: Collusion?
It's called the MPAA.
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 2:11pm

Re: Collusion?
Except you see, Paramounts "statement" is 6 or 7 months old. The story is about recent events (in the last few months). I suspect that Paramount has found out that the downside of making Redbox and others wait is nothing compared to the upside of increased PPV style sales.

It's more misleading information from TD, because unless you go look at the details of the previous story, you wouldn't realize that Paramount's comments have nothing to do with today's news, only an old observation made without the benefit of experience that has happened in the last 6 - 7 months.
[ link to this | view in thread ]
theangryintern (profile), 14 Jan 2011 @ 2:12pm

Imagine that! Putting a month long delay doesn't get people to buy the DVD instead. I'm shocked, I tell, you! shocked!

/sarcasm

For Redbox this was a really bad idea, as most of their business will be people wanting the new releases. For Netflix it's not that big of a deal for most people as their queues are so long (or at least mine is) that they rarely get a new movie until well after a month anyway.
[ link to this | view in thread ]
The Mighty Buzzard (profile), 14 Jan 2011 @ 2:12pm

Re:
Sure you can, go into politics.
[ link to this | view in thread ]
teka (profile), 14 Jan 2011 @ 2:15pm

Re: Re: Re: According to the Yahoo News article I read
"Nabbing rentals during a key period"

Thats right, i forgot that all movie studios run rental companies as well.

Wait, they don't?
So.. Redbox and the like are Increasing their business, by buying lots of copies? Or they were. Because as business gets worse for these entities, they will no longer be buying those copies.

Weird. So studios/distributors are happy that someone else is doing badly, even when that means that they themselves are not benefiting in any way?

Sure sounds like business that is good for consumers and the industry alike!
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 2:24pm

Would it not be a valid question to ask the effect this delay practice is having on the bottom lines of the studios?

Positive? Negative?
[ link to this | view in thread ]
The Mighty Buzzard (profile), 14 Jan 2011 @ 2:30pm

Re: Re: Collusion?
It's currently ALL misleading, vague generalities. Numbers or GTFO.
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 2:44pm

Re: Re: Collusion?
Has Paramount's views on the subject changed? If not, then the old article is still valid.

If they have, please provide data that backs that up.
[ link to this | view in thread ]
herbert, 14 Jan 2011 @ 2:46pm

the studios did this so that they can still say 'we are in control!' they are not interested in whether any company offers good deals or not. they still think that delays like this will make them more money in actual movie visits and disk sales. if customers want to buy, they will buy, if they want to go to the movies, they will and if they want to rent they will WAIT, then rent. reducing the options to customers hinders, not helps the studios. i just wish the thick fu**ers in charge could see how they are hurting themselves by hurting their customers.
[ link to this | view in thread ]
Deimos280 (profile), 14 Jan 2011 @ 3:41pm

cant stop the signal mel
REDBOX: We have movies for rent, cheap and convenient the day there avbl on DVD! ... HOLLYWOOD: you wana, um... not have that? ... REDBOX: sure sounds good! ... I hope someone at redbox management go fired.
[ link to this | view in thread ]
MPAA, 14 Jan 2011 @ 3:58pm

Re:
No, it wouldn't. Now, shut up and go buy some DVDs and Blu-Ray discs!
[ link to this | view in thread ]
Hephaestus (profile), 14 Jan 2011 @ 4:56pm

Re: Kids and Candy Bars
"I believe it goes back to psychological experiments that were mentioned here awhile back. Tell one he can have half of a candy bar, OR he can have a full size candy bar if another kid also gets a full size one. Most kids chose the lesser, because they didn't want somebody else getting anything from their decision."

I remember a study like this, but the first kid had to wait for the second kid to arrive and was made to wait 30 minutes. Maybe the studio executives were part of the experiment. Early childhood experiences and all ... :)

"That seems to be the studio's problem (both for movies and music really). They can't stand the idea that somebody else might possibly make money off of the content, even if it helps them out. ... That (the greed) would also explain their odd sense of entitlement for new technologies, ..."

Actually it is the psychology of monopoly and control. One of my friends is writing his psych and business management dissertations on this.

The psych part deals with the people in charge being incapable of breaking the mental patterns they and the people around them have. The belief that things have always been this way and will never change. This is the way we have always done things and it has always worked before is a common theme.

Here is the psych dissertation in a nut shell ...

The problem with the belief that their actions were effective in affecting the change they sought is, it never made any difference, in any way, shape, or form, in the outcome. What they fought against occured regardless, and the control they thought they had was an illusion.
[ link to this | view in thread ]
Hephaestus (profile), 14 Jan 2011 @ 5:18pm

Re:
" i just wish the thick fu**ers in charge could see how they are hurting themselves by hurting their customers."

They are in a customer service business and not serving their customers. They do not see this, they have been a monopoly able to dictate to their customers for so long they never needed to put service first. Expect it to continue until, new technology, competition, and production houses going independent destroys them.
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 7:25pm

Re: Re: Re: Collusion?
The Paramount comments were made before things changed. They have not said anything since it has changed, but since the situation has changed, we cannot assume their opinion remains the same.

All I was pointing out was that using a 7 month old quote from a single company before the change was made is somewhat misleading. We don't know their opinion now, do we?

The old article was valid, 7 months ago. Situations have changed, so they may no longer apply.
[ link to this | view in thread ]
sum quy, 14 Jan 2011 @ 9:30pm

i believe most people are leaving physical medium behind and simply streaming video, so i'm not sure that there is a direct correlation between what redbox was expecting and the 28 day delay. physical dvd sales were down also. i would be very interested in seeing netflix' holiday numbers, because, i think people have turned their attention to instant video on demand. there are enough ways to get video without the hassle of going out to get a piece of plastic. either through their cable services' box, or through their apple tv, or their google tv, or roku, hulu, youtube, !!BITTORENT!!, usenet...

(deep breath)

htpc, iptv, emule, itunes, utunes, wealltunes, togethertunes...

point is, why would anybody lug around a plastic disc anymore? it's the 21st century for crying out loud!
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 10:35pm

Re:
streaming is going to be the death of all those distribution systems, replace by "studio direct" at some point. At best, you will have a very few key players repping the studios, and it will end there.

Redbox isn't a long term business model. The studios are basically just sending that one to the knackers yard a little early.
[ link to this | view in thread ]
Anonymous Coward, 14 Jan 2011 @ 10:43pm

cause some exec dumbasses convinced fools to go for it.

. PERIOD!
[ link to this | view in thread ]
Anonymous Coward, 15 Jan 2011 @ 9:40am

Re: Re: Re: Re: According to the Yahoo News article I read
I didn't miss the point in the slightest. Coinstar had set up a system that turned $XX of sales in to $x of rentals. In the short term, it would appear to be a good thing, the consumers are obviously happy to spend less money to enjoy the product. But it is unnatural, because the rental price was far below what the supply / demand curve would suggest.

That is the easiest transaction, but it is also the transaction that leaves the most money on the table.

I don't expect Coinstar to be happy. They have lost a market position that allowed them to massively undersell everyone else. What it proves is that people aren't willing to wait, there is enough demand to tap the supply at a higher price. when they wait 30 days, they are losing because people have already paid more to get what they wanted.

The movie people clearly and very correctly have judged supply and demand properly, a very good business move. Coinstar is only upset because they can no longer drain the larger pool for profit, no matter how much it cost everyone else.
[ link to this | view in thread ]
John Fenderson (profile), 15 Jan 2011 @ 9:43am

In our house, we use both Redbox and Netflix and don't have cable. We stream through Netflix when it has what we want to watch in the instant, and when it doesn't we locate the desired title through Redbox's website and rent it there.

If it's a title that we aren't in a particular hurry for, we add it to our Netflix queue.

If it's not yet available on Netflix, we wait.

You know what we never do? Buy DVDs. There are no movies that are so incredible we can't wait a month or two before seeing them.

So, in our household, these windows don't help the studios one bit. Redbox agreeing to the windows hurts Redbox and (potentially) helps Netflix. Redbox's decision was obviously an incredibly bad one.
[ link to this | view in thread ]
Anonymous Coward, 15 Jan 2011 @ 10:47am

Re: Re: Re: Re: Collusion?
Or they may still apply.
[ link to this | view in thread ]
Colin, 15 Jan 2011 @ 1:09pm

Re: Re: Re: According to the Yahoo News article I read
I saw the same report today on CNBC. The movie industry people are generally very happy with the results, and the decline in Coinstar's rental business clearly indicates that they were nabbing rentals during a key period.

But were they nabbing sales? For me, personally, if there's a movie I want to buy, I'll buy it. If I want to rent it, I rent it. If I can't rent it, I'll either a) wait, or b) forget about it. Is there evidence that this is actually helping sales and not only hurting rentals?
[ link to this | view in thread ]
Anonymous Coward, 15 Jan 2011 @ 1:32pm

Re: Re: Re: Re: According to the Yahoo News article I read
Colin, the slip in redbox rentals is an indication that people are not waiting as long. They are doing something about it. The movie companies appear to be content (the ones TD doesn't want to talk about), which suggests sales are on the levels they were expecting. It will be interesting to see if PPV and such picks up as well as a result.
[ link to this | view in thread ]
Anonymous Coward, 15 Jan 2011 @ 9:18pm

Re:
You are actually a perfect example. You aren't going to change your habits, only perhaps offset certain movies 30 days. You are the proof that there is little loss in moving the window out 30 days.

However, there are people who might buy (or do PPV) to see the movie within that window. So what happens is increased revenues during the time period. In the meantime, you aren't really caring, you take it when it comes, no big deal.

See? Redbox's decision really isn't a bad one. The only customers they lose are the ones who were willing to pay more anyway.
[ link to this | view in thread ]
econoline (profile), 17 Jan 2011 @ 12:48am

in a word comcast...
Here in Oregon Comcast advertises like crazy that it's crappy on demand service has movies right away, 28 days before netflix/redbox, so it seems like the only one benefiting from this is comcast's marketing department.
[ link to this | view in thread ]
TonyG, 17 Jan 2011 @ 5:28am

Re: Kids and Candy Bars
The studies you refer to actually found that those who "chose the lesser" did so because allowing someone else to benefit without them having contributed in any way was unfair.

It was perceptions of fairness, not greed, that drove the results.
[ link to this | view in thread ]
Anonymous Coward, 17 Jan 2011 @ 6:16am

Re: Re: Re: Re: According to the Yahoo News article I read
Well by not wanting to set up their own rental business, the studios can then offer contracts to DirectTV and Blockbuster for millions of dollars to have "exclusive" rental content.

As long as they get the Redbox to cave into their demands, they're free to set up all these shady deals.
[ link to this | view in thread ]
Anonymous Coward, 17 Jan 2011 @ 6:49am

Re: Re:
Over 10 years in and still counting..... tic, tic, tic....
[ link to this | view in thread ]
Anonymous Coward, 17 Jan 2011 @ 3:07pm

Gradually becoming an Ex-Customer
Their plan worked. I haven't been to red box since the 28 day delay went into place. They're now locked into a contract they can't get out of and bleeding customers. In the end, in my eyes, this killed a very smart and innovative new business. I own over 1000 legally purchased films (probably closer to 2k). My collection started with vhs around 1986 and has grown over time. I don't buy as many these days, not because of red box, but because I don't wish to put money in the pockets of greedy people who complain that I've only bought x amount when they wanna sell me y amount and also because the products are so locked down these days with DRM. Apple won't (more like can't) sell me HD video on itunes unless I buy a new operating system. My computer is a year old. Go figure. So in the end, I don't buy anything or very little of anything. It really does get less by the year. The studios are killing their own business. Not anyone else. My spending has shifted elsewhere because the more I hear about movie studios/recording industry tactics, the worse the taste gets in my mouth for them.
[ link to this | view in thread ]
keith (profile), 18 Jan 2011 @ 4:43am

Re: Lots of reasons
#1 -- It is not just about receiving a cash payment, I believe they have a direct financial stake (control) in blockbuster (and/or other 'instant view' services), and this is the way they are trying to differentiate themselves in the market place to try and unseat Redbox. Just offering a 'blockbuster' version of Redbox probably wouldn't unseat their customer base ... but giving them a 'RtB' may, and by making Redbox less convenient to the consumer they don't have to innovate, just copy the existing model.

Redbox was a wildcard, managed by people outside the fold, with incentives that don't match up with the traditional corporate efforts of the studios. The whole 28day release was a strategic move by the studios to kill Redbox.
[ link to this | view in thread ]
Killer_Tofu (profile), 18 Jan 2011 @ 6:29am

Re: Re: Kids and Candy Bars
Thank you for this clarification.
I will keep that tidbit in mind for the next time I need to refer to that.

That would still fall in line with the major's thinking. They always view the content as bringing 100% of the value. As an example for this you can look at the fees they always want to charge to license anything (the songs for Guitar Hero games comes to mind first). The games are of immense value and could use any songs really but the majors think the games are worth nothing without their songs.
[ link to this | view in thread ]
Anonymous Coward, 18 Jan 2011 @ 6:51am

patience. this game is all about patience.

the 28 day delay is only a big deal to people who have to see the movie OMG NOW NOW NOW.

patience.

what is a month, really? put it in your netflix queue and watch some godzilla to pass the time.

here is the important part to remember: the movie is not going to change if you wait to see it.

they make money off your impatience. the value of the movie in those 28 days is based off your impatience. the studioes are banking on it.

so be patient. or better yet, stop buying their crap all together.
[ link to this | view in thread ]
Diablo Dean, 17 Jan 2012 @ 12:23pm

28 day delay
Why doesn't RedBox go on an indie film buying spree n fill it's kiosks w/ content they own & a splash of Studio content? Be great for them, indie filmmakers & yes even the consumer. In time the studios'll be back, question is would RedBox want em?

Cmon RedBox pretty basic, ya got an opportunity t own the distribution, content & ultimately the consumer.
[ link to this | view in thread ]
elev8, 19 Jan 2012 @ 10:32pm

I personally thought that it was a good idea but are there any key west rentals mentioned in the conversation?
[ link to this | view in thread ]