Rich Fiscus
21 Dec 2011 8:59
As rumors fly that Warner is trying to delay new releases in Redbox kiosks by more than two additional weeks, one analyst is suggesting they are overestimating their leverage.
The introduction of 28 day delays between the time titles are released for sale and when they are offered for rental is a scheme the studios came up with in 2009. It is intended to be an incentive for consumers to buy discs which can't yet be rented.
Although Netflix was the first company to agree to these windows, Redbox was the studios' primary target because of their presence in major retail chains. Not surprisingly, disc sales have not made the resurgence predicted by the studios.
The deals were pushed through largely by backroom deals between the studios and companies supplying discs to rental outlets. According to Eric Wold, an analyst with B. Riley & Co, over the last several months Redbox has worked out a strategy to get around those arrangements.
Home Media Magazine recently reported about an investor note in which he wrote:
While Redbox was forced into a workaround two years ago on minimal notice, the workaround plan developed since that time has been developed as a long-term replacement to a studio agreement (with copyright law in the company's corner).