Blockbuster Using Its Deal With Warner Bros. To Mock Redbox And Netflix

from the getting-desperate? dept

You may recall that, at the end of March, Warner Bros. studios did a new deal with Blockbuster that seemed likely to confuse the hell out of consumers. That's because Warner Bros., in its backwards-looking wisdom, had already done deals with both Netflix and Redbox to not make new release movies available to rent until 28 days after their release. There is no good reason for this, other than it pisses off customers all around, and makes them less interested or inclined to bother watching Warner Bros. movies (hint to WB: you have competitors).

But the Blockbuster deal seemed confusing -- because most consumers wouldn't be following these silly deals and wouldn't understand why a movie had been "released" but wasn't available via their favorite rental service. Apparently, Blockbuster's answer to all this is to mock Netflix and Redbox for not carrying new releases. Seriously. Reader Daylyn sends in the following ad he recently saw that points out that Netflix and Redbox don't carry this movie: Apparently, this is all part of Blockbuster's new WB-partnered advertising campaign: "hey, the movie studios screwed over our competitors! rent from us!" Looking around, it appears a few others have noticed this campaign as well, which went into place quite quickly after the WB deal was announced.

Filed Under: delays, dvds, rentals
Companies: blockbuster, netflix, redbox, warner brothers

Warner Bros. Latest Movie Release Strategy? Confuse The Hell Out Of The Market And Prop Up Blockbuster?

from the at-least-that's-what-it-appears-to-be dept

It's tough to figure Warner Bros. out these days. It got both Netflix and Redbox to agree to delay renting new release movies for 28 days in an effort to get more people to purchase DVDs. For this, it got hit with a class action lawsuit. But now comes the news that it's signed a new deal with the financially troubled Blockbuster that has no such restriction. This has lots of people scratching their heads. The obvious answer is that Blockbuster is promising Warner a lot more money...

But there's a bigger issue here, which goes beyond just commentators scratching their heads: this is going to confuse a lot of customers at a time when that's the last thing Warner Bros. should be doing. Your average movie renter isn't paying attention to the silly games that Warner execs are playing, and all they want to know is how come they can't rent the latest release. If Warner somehow convinced all players not to rent until a certain date, then that would effectively have just shifted the release date further back (a dumb move in an age when windows are shrinking... but that's Hollywood for you). However, by having the movie available for rental in some places, but not others, it's now setting itself up for mass customer confusion, where people will hear that a movie is available, but then get pissed off that it's not available in their preferred rental system.

It's as if the folks in Hollywood haven't been paying attention to what happens to companies that aren't providing what their customers want.

Filed Under: dvds, movies, rentals, windows
Companies: blockbuster, netflix, redbox, warner bros.

Indiana County Decides Not To Charge Redbox After Public Outcry

from the lawsuit-by-public-opinion-poll dept

Last week we wrote about how prosecutors in Indiana were threatening to file criminal charges against Redbox execs unless the company agreed to remove R-rated movies from its kiosks. The whole thing was instigated by brick-and-mortar video stores who didn't like competing with Redbox's $1 video rentals. However, as news spread about this threat, it seems that the residents of that county raised their voices and let the prosecutor know they wanted to keep their Redbox and its R-rated movies. The prosecutor noted that the standard for whether this was a problem was "community standards," and the community made it loud and clear to him that they wanted the Redbox kiosks to stay:

"It's not an exact barometer -- I didn't take a poll -- but it just seemed pretty clear to me that the community would not be behind the prosecution of this," Stan Levco said during Friday's news conference.

While it's good that he's backed down, I'm still not sure which is more troubling, that he initiated the threats at the behest of competitors, or that public outcry alone was enough to get him to back down.

Filed Under: dvds, indiana, movie rentals, movies
Companies: redbox

Indiana Prosecutor Threatens Redbox With Criminal Charges If It Doesn't Remove R-Rated Movies

from the let-me-introduce-you-to-the-constitution dept

Brandon alerts us to the news that an Indiana prosecutor is threatening to bring criminal charges against Redbox execs if they don't remove R-rated videos from the kiosks. The claim, of course, is that this makes it easier for those under 17 to access those movies. Of course, that doesn't explain what's actually criminal about it. Indiana is among the handful of states that should know this -- seeing as politicians there tried to pass a law stopping retailers from selling "mature" video games to kids -- but every law of that nature has been thrown out. The current movie rating system is not, in fact, enforced by the government as that would be a restriction on free speech. Instead, it's a voluntary agreement within the movie industry. In other words, there is no legal issue with these kiosks.

And, of course, the true story behind this threat is found early on in the article. It has nothing to do with "protecting the children" at all. Instead, this is a bunch of independent video rental stores trying to shut down the competition:

"I'm not on a crusade," said Paul Black, an Evansville attorney who says he suggested the inquiry to Levco's office on behalf of a client who operates several video store locations. "We're just looking for a level playing field here."

That's not leveling the playing field. It's trying to block competition -- and doing so with bogus charges of criminal behavior.

Filed Under: criminal charges, dvds, free speech, indiana, kiosks, movies, r-rated
Companies: redbox

Redbox Caves To Warner Bros., Will Delay New Movie Releases From Kiosks

from the dumber-and-dumber dept

Some of the movie studios (admittedly, not all of them) have been on a braindead fight against Redbox -- despite the fact that Redbox had created a service that people liked and were paying for and that generated revenue for the movie industry. There are still ongoing lawsuits, but today came the news that Redbox caved to Warner Bros., on the most important point: delaying the availability of new release movies until 28 days after the release. Yes, this is the same deal that Warner Bros. convinced Netflix to agree to last month. Basically, Warner Bros. is telling people to either not rent its video or to download them from an unauthorized source.

The whole thing makes no sense at all. Warner Bros. mistakenly thinks that if people can't rent a particular DVD in the first four weeks of release, they're more likely to shell out money to actually buy the DVD. This is Warner Bros. pretending that it can influence customer behavior by denying them what they want. That's a strategy that has never worked well. What this means is that at the moment when Warner Bros. actually puts some marketing effort behind the DVD release, that movie will not be available from the most popular rental options. And, the bizarre reasoning put forth by Netflix that this would benefit customers by improving inventory and availability of movies is not seen in reality. So rather than pissing off some customers because a movie is not available, you're now pissing off all customers by making the movie not be available on purpose, and then effectively massively increasing the amount of time they have to wait to see the movie? Does no one at Warner realize that a lot of those "customers" will simply decide to go see other movies or to download an unauthorized copy instead?

Based on Warner Bros., logic here, why release movies at all?

Filed Under: delays, kiosks, movies, releases, rentals, windows
Companies: netflix, redbox, warner bros.

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

from the how-nice-of-them dept

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.

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

If Hollywood Is Upset About $1/Day Movie Rentals, How Do They Feel About 6 Cents Per Hour Rentals?

from the it'll-destroy-Hollywood-even-more! dept

So Hollywood is all concerned that Redbox DVD rentals at $1 per day are going to do serious damage to the Hollywood economy -- except, of course, that the actual numbers say exactly the opposite. Still, if they're all freaked out (and some are in court) over $1/day rentals, you'd have to imagine they're not particularly pleased about rentals that could be even cheaper. Rose M. Welch points us to the news of a new DVD rental kiosk operation, called Big Box DVD, which is moving forward with a business model of charging a whopping 6 cents per hour for a new release (4 cents per hour for an older release). For folks willing to just rent the video, take it home, watch it and return it, that can be quite cheap. Of course, if you keep it for a full 24 hours, it'll be a bit over a dollar. How long until we hear about how much damage this is doing to Hollywood?

Filed Under: business models, dvd rentals, dvds, hollywood, kiosks, movies
Companies: big box dvd, redbox

Study Being Promoted As 'Redbox Kills Jobs' Actually Shows That Hollywood Jobs Will Grow

from the not-what-they-said... dept

We've already been covering Redbox's legal fight with a few movie studios who so hate the idea that Redbox is actually giving people something they want (legally) at a reasonable price (legally), that they want to kill it. The whole thing is so ridiculous that it's difficult to believe there's anyone out there defending the anti-Redbox studios' position (and, in fact, a couple of the other studios, with Paramount in the lead, have realized that it's smarter to partner with Redbox than to try to kill it). Yet, the Los Angeles Economic Development Corporation (a non-profit with LA government connections) has put out a report claiming that Redbox kills jobs and harms the economy throughout Los Angeles (thanks to reader Valkor for sending this in). If you want, you can read the full report (pdf) -- but prepare to be amazed as what the report actually says is quite different than the press release headline.

Hidden within the report are claims that the industry will continue to grow nicely for the next decade and that alternative business models will develop that more than compensate for any loss of revenue from reduced rental prices. But that's not what the headline of the press release says. No, it reads:

Study says low-cost DVD rentals could lead to $1 billion, 9,280 jobs lost

But, deep in the actual report? Why, it says the following:

The shift to digital delivery will provide new revenue streams for the industry and new opportunities... Increased availability of all types of digital content and media have changed lifestyles and will continue to contribute to demand for video products. Indeed, SNL Kagan forecasts continuing growth in overall industry revenues as alternative streams compensate for this loss of revenue. In total, SNL Kagan projects an increase in distributor revenues from all sources worldwide from $51.3 billion in 2008 to $67.6 billion in 2017. While the composition of these revenues will clearly change, distributors will continue to experience revenue growth into the next decade.

So how does it get from that to the headline? Well, it assumes that Redbox is decreasing revenue from traditional rental, and seems to assume that these other alternative revenue streams are not influenced by Redbox or other forms of distribution that are more convenient and cheaper and attract a new or different audience -- which seems like a dubious assumption. Another way of looking at this: it's as if the horse and buggy industry put out a report just as automobiles were coming to market that said, yes, the auto industry will be huge and will create millions of new jobs, but because a much smaller number of jobs are lost due to downsizing the carriage market, we can release a report saying that the auto industry is "killing jobs." Logically, that's ridiculous.

On top of that, it makes some odd assumptions throughout the report, continually throwing out the idea that Redbox itself might increase the revenue for the industry, repeatedly suggesting that the industry is mature and if there were a way to get more revenue out of it, it would have already been discovered. Of course, considering that the market has long been dominated by a single player, not prone to innovating, and with close ties to studios that have limited some of how it could act -- that assumption is highly suspect. In fact, the very reason that Redbox has been so popular (and which also explains the rise of Netflix) has been consumer dissatisfaction with the old Blockbuster model, which was designed to squeeze consumers.

To the authors' credit, they do try to be fair on other numbers and assumptions, recognizing that effects go in multiple directions and that there are other issues at play, but the press release headline claiming that Redbox costs the industry a billion dollars and nearly 10,000 jobs, when the actual report claims that revenue is increasing and will continue to do so, just seems hard to swallow. Unfortunately, every single press report covering this study seems to only take the PR headline from the report and repeat it, without anyone appearing to have read the part of the report that says the exact opposite of what the headline claims.

Filed Under: dvds, hollywood, jobs, los angeles, predictions, rentals, ripple effects
Companies: laedc, los angeles economic development corporation, redbox

Could Redbox Crowdsource Its Way Around Movie Studio Blockades?

from the connecting-with-fans dept

Last week, we wrote about the legal battle Redbox is facing with some of the movie studios. Redbox, of course, rents DVDs at a $1/rental from vending machines that it places all over the place. Some of the studios are upset that (a) they don't get a cut of each rental and (b) that Redbox also sells those DVDs. So they've been trying to force Redbox to sign agreements that would give them a royalty cut and which would put limitations on Redbox -- such as not renting out videos until well after the DVDs are released and also having the company destroy, rather than sell DVDs when they were done renting them. Of course, the labels don't have much of a legal claim here. Redbox has every right to buy DVDs and to then rent them (right of first sale and all that). But, what at least some of the studios have done is to demand that DVD wholesalers not sell to Redbox, which certainly seems like a typical restraint of trade situation. In at least one case, a studio has also told downstream retailers, like Walmart and Best Buy not to sell to Redbox either.

Now, you might think that Redbox could just send employees into those stores without saying where they're from, but those stores probably don't carry enough stock for Redbox to buy enough DVDs efficiently. But what if they did something different? In the comments to that post last week, our rather insightful community started suggesting ways that Redbox could get around the sales blocks from studios by crowdsourcing the acquisition of movies.

There were a few different suggestions on how this could work, but the basic idea, presented by commenter "McBeese" laid out the basics:

• Consumers open online accounts with Redbox. The account contains a Paypal id for deposits.
• Redbox publishes how many copies of each DVD that they want.
• Joe Consumer buys the movie, watches it, and then logs in to the Redbox site and 'pledges' the DVD. Each pledge automatically reduces the amount of a particular DVD that redbox is seeking.
• Joe consumer mails in the DVD with an associated pledge number. When the DVD is received, the agreed amount is deposited into Joe Consumer's account.

A little slower than buying in bulk, but unstoppable.

I'd argue that rather than paying the user for it, Redbox could just credit their account for a certain number of free rentals. Then, not only does Redbox get these movies, but it builds up an even more loyal userbase... with really no significant way for the studios to block this out. There are some things that are tricky about this -- including verifying that the purchased DVDs are what they say they are, and coming up with a way to accurately handle the inventory management, but it is creative, and it shows that as much as the studios want to think they can control this market, there's always going to be some way around their restrictions.

Filed Under: crowdsourcing, dvds, movies
Companies: redbox

Looking At The Redbox Antitrust Fight

from the is-it-an-antitrust-issue-or-not? dept

Law.com has a nice article detailing the legal issues involved in the battles between Redbox and the various movie studios. The main question is whether or not it's an antitrust violation on the part of the studios to block distributors, wholesalers and retailers from selling DVDs to Redbox. The studios want (a) a revenue share from Redbox (b) Redbox not to offer new release DVD movies for rental and (c) Redbox not to sell used DVDs. The reasons are pretty obvious: Redbox is a much more competitive offering. Since it's a lot less labor intensive, it's able to offer the DVDs for much less (both rental and sale), and the movie studios are freaking out, because in their minds, their old revenue streams should never be allowed to decrease.

The statements from the studios on the dispute is incredibly disingenuous:

"The real complaint is Fox won't sell DVDs to Redbox on the terms Redbox demands, and that is not in our view an antitrust violation," said Watson, an antitrust expert who has teamed with Yosef Riemer, a litigation partner in Kirkland & Ellis' New York office, in representing Fox, part of News Corp.'s Fox Filmed Entertainment. "There's nothing in the law, antitrust or otherwise, that says a seller must sell its product at the price that the buyer demands on the date the buyer demands and through the distribution channel that the buyer demands."

Indeed, Watson is correct that no seller needs to offer the product at the price the buyer demands, but that's not what's being disputed here at all. Clearly, prior to Fox and some of the other studios throwing their hissy fit, the distributors had no problem selling DVDs to Redbox at the prices Redbox thought were reasonable. The studios sold the movies to the distributors at the usual price, and the distributors sold them to Redbox at the usual price. Everyone should be happy.

But... what happened now is that these studios (Fox, Universal and Warner Bros.) told not just the distributors (Ingram and Video Product Distribution) but also retailers like Best Buy and Wal-Mart to not sell to Redbox. That's restraint of trade. The studios have every right not to sell videos to whomever they want -- but those distributors and retailers can then sell to whomever they want. The studios should have no say in the downstream sales of the videos once they've been sold to the distributor, wholesaler or retailer. That's where the antitrust issue is. The studios are successfully controlling downstream sales.

The studios are either being disingenuous or are just playing dumb when they claim that there's no antitrust violation because end users can still rent movies from Blockbuster or Netflix. But, that's defining the wrong "user" for the market in question. The market is in being able to buy from the distributor/wholesaler, and the "customer" is a retailer like Redbox. And these studios have stopped that customer from being able to make a perfectly legitimate purchase. That's the antitrust issue, and it's amazing that the studios think anyone will believe their false market definition or this bizarre claim that this about Redbox demanding some special price. It's not. Hopefully the judge recognizes that and doesn't fall for the studios simply making stuff up.

Filed Under: antitrust, dvds, rental
Companies: 20th century fox, ingram, redbox, universal, video product distribution, warner bros.