If you go shopping at your local grocery store, you have probably noticed Redbox, the small red-colored kiosk that rents out movie titles for a dollar. Now Redbox is fighting with movie studios to get access to the latest movies for its customers.
Customers reap the benefits when they can rent the latest movie titles on DVD for just one dollar right where they do their grocery shopping. Not only is it convenient and quick to rent from the brightly-colored Redbox machine, it is also ultra cheap.
Recent Redbox Lawsuits
Some movie studios do not want to provide movie titles because the studios do not want to lose any revenue, and they would certainly lose money to Redbox because Redbox rents movies as cheaply as humanly possible.
Recently Universal Pictures and Twentieth Century Fox decided to no longer supply Redbox with their DVD discs, according to a news report in the Washington Post. This does not prevent Redbox from renting movies made by these studios, but rather forces Redbox to pay retail prices for the movies and then rent them. It is certainly more expensive and less convenient to do it this way.
So Redbox promptly filed a lawsuit against Universal to try to get the studio to continue shipping the discs to Redbox. A decision is expected soon as to whether Universal must go back to giving Redbox quick access to the discs of films that have gone to DVD.
Redbox President Mitch Lower recently was interviewed in the Los Angeles Times. In the interview he discussed his company’s other lawsuit, with Twentieth Century Fox. He said the purpose of the suit was to get the movies to Redbox sooner and not have a 30-day delay.
Redbox already has contracts with some studios in which Redbox designates a certain number of titles from those studios to be available for rent in each Redbox. This guarantees a revenue stream for each studio.
Future of DVD Rentals
What these lawsuits indicate is a complicated arena where on the one hand the film studios want customers to have access to their movie titles, but on the other hand studios do not want customers to get used to paying a single dollar to watch the movie.
Studios get a lot more money when customers buy their movies and not rent them, so you can imagine how little the studios get when the rental cost is one dollar.
All of this controversy with Redbox and the studios may be moot in a matter of a couple years. The world is changing fast from a technological perspective and pretty soon renting physical DVD discs could become a product of a bygone era.
Netflix and Hulu
Netflix is far ahead of the pack with its ability for customers to watch unlimited numbers of movies through a computer via the Netflix Web site. Customers of Netflix currently pay a monthly fee for a certain number of discs in the mail each month. But customers also get, for no additional cost, the ability to watch older movies as much as they like through the Netflix site.
In addition to Netflix, Hulu is becoming a hugely popular movie and television episode viewing destination on the internet. Hulu is free to use and is paid for by advertisements at selected intervals of the movie or TV episode.
Pretty soon the majority of people will be watching their movies and television shows online and Redbox will be a distant memory.
“Hollywood’s Redbox Quandary,” Washington Post/ Associated Press, Aug. 10, 2009.
“Redbox CEO: we have a negligible effect on DVD sales,” Los Angeles Times, Aug. 12, 2009.
