Redbox kiosk DVD embargo

[Smokey]

Good luck finding such new-release DVDs as "Terminator: Salvation," "Night at the Museum: Battle of the Smithsonian," "Ice Age: Dawn of the Dinosaurs," and "Brüno" at your local Redbox kiosk.

That's because wholesale distributors for three of the biggest Hollywood studios—20th Century Fox, Universal, and Warner Brothers—have begun holding back their latest releases from the likes of Redbox and other $1-a-night DVD rental kiosks until about a month after they arrive in retail stores, essentially making for a four-week embargo.

That, in turn, has forced Redbox (which has filed lawsuits against Fox, Universal, and Warners over their "anti-competitive" policies) to buy titles like the new "Terminator" movie, "Orphan," "My Sister's Keeper," and "Aliens in the Attic" from retailers like Walmart and Target.

It's a pricey proposition even given the discount prices at Walmart and Target, considering it has 20,000 kiosks (and a projected 30,000 by the end of next year) to fill, analyst Richard Greenfield tells Home Media.

Making matters worse, Redbox is now accusing Fox and Warners of leaning on Walmart and Target to limit retail DVD sales to Redbox and other kiosk companies to just three discs per embargoed title.

Why is all this happening, you ask? Because the big Hollywood studios are blaming Redbox and other buck-a-night DVD kiosks for—in part, anyway—their dwindling DVD revenue, and they're hoping to boost sales by keeping their latest releases from the likes of Redbox until about a month after they've arrived in retail outlets.

http://tech.yahoo.com/blogs/patterso...lLRWwBtwiCLZA5

[Geoffcin]

Sounds like Redbox has a good case for an Anti-trust lawsuit.

[02audionoob]

Do the studios get a royalty for each rental?

[Geoffcin]

Do the studios get a royalty for each rental?

No. Never have.

[02audionoob]

No. Never have.

I've got to read up on this stuff. Audio recordings can't just be rented out like that. I figured the video renters were paying for the right to rent.

[Smokey]

Sounds like Redbox has a good case for an Anti-trust lawsuit.

I don't know, but studios might be shooting themselves in the foot here. I know alot of people that will rent a movie to see if it is any good before buying it as price of new releases are premium and they don't to waste cash on a bad movie.

But what boggle the mind is that movie studios are telling retailers like Walmart or Target who they should sell their DVDs to. WTF??

As it was said Redbox have 20,000 vending machine and if they buy new released DVDs from WM or Target, that would add up to handsome profit for retailers. So it only make good sense for retailers to fight back and tell studios to keep their nose out of their business.

[Geoffcin]

I've got to read up on this stuff. Audio recordings can't just be rented out like that. I figured the video renters were paying for the right to rent.

No, it makes sense. Think of a recorded movie like a car;

Ford sells Avis cars. Avis has every right to rent them out to customers without paying for a licence fee to do it. Ford has nothing to say about that.

The only area where it differs is if you decide to have a showing of the film for profit. Then you would have to pay royalties. This applies even if you were to do it on your own home!

[frahengeo]

That's strange?? In my area, there hasn't been an issue having those titles in Redbox. During the 1st and 2nd week it can be difficult to rent due to availability,but I was able to rent Salvation last week.
One title that wasn't released to Redbox was "The Reader". Apparently, some exclusivity deal between Weinstein and Blockbusters. There are probably more titles, but I'm not aware of it.

I'm sort of torn about this. I feel that studios have the right to distribute their media anyway they see fit and should be allowed to utilize the best strategy to allow them to make the most money.
At the same time, I use Redbox to "screen" what's purchase worthy and what's not. I guess that I'll have to wait then.

[bfalls]

Another reason they may hold off a month before offering the titles to Redbox is piracy. Usually if a studio has a title copy-protected it's for the first 30-60 days when the majority of copies are sold. The studios are worried that mom and pop will rent the movie, rip it, then give copies to family and/or friends. This is where it really cuts into sells.

We copy-protected Twilight and saved Summit well over a million dollars in lost sales due to piracy within the first 60 days. After the initial time period subsequent reorders are either pressed without copy-protection or with protection, but not charged for it.

After 60 days either the ripping tools have created a work-around and updated their applications, or the buying frenzy is over and losses diminished. It's a continuous battle. We try something new. They break it. We do something else. Since we have to abide by the DVD standard, there will always be a way around the protection. We also have to make sure what we do doesn't cause playability issues. It's a delicate balance.

So I guessing it's not only the loss of sales due to rental warranting the action as much as the combination of rental and piracy.

[02audionoob]

No, it makes sense. Think of a recorded movie like a car;

Ford sells Avis cars. Avis has every right to rent them out to customers without paying for a licence fee to do it. Ford has nothing to say about that.

The only area where it differs is if you decide to have a showing of the film for profit. Then you would have to pay royalties. This applies even if you were to do it on your own home!

A recorded movie isn't at all like a car. A car is a product where the entire value is in the thing itself. A movie is a creative work, where the value exceeds the medium on which it is distributed. It's like a song or a book. Regardless of the laws on the matter, this fundamental difference between a movie and a car is obvious.

[Geoffcin]

A recorded movie isn't at all like a car. A car is a product where the entire value is in the thing itself. A movie is a creative work, where the value exceeds the medium on which it is distributed. It's like a song or a book. Regardless of the laws on the matter, this fundamental difference between a movie and a car is obvious.

A movie isn't like a car, but a recorded DVD is.

If I buy a car I can let you drive it,or if I buy a DVD I can let you watch it and I owe nothing to either manufacturer. However, if I decided to copy the technology in the car and sell it to you, or copy the content of the DVD and sell it, then I am breaking the law. Redbox has every right to buy DVD's and rent them, however if they so much as copy one then they are in copywrite infringment.

[Geoffcin]

A recorded movie isn't at all like a car. A car is a product where the entire value is in the thing itself. A movie is a creative work, where the value exceeds the medium on which it is distributed. It's like a song or a book.

Oh boy! There's whole legions of automotive engineers and designers who you've just dissed by saying that a car isn't a creative work comparable to film.

Again, a song or a book is also a thing that once recorded and sold by the original artist/author can be passed from person to person with no monitary renumeration owed to the author. However, if you were to copy it and sell it, or re-record it and sell it you would owe royalties.

[02audionoob]

Oh boy! There's whole legions of automotive engineers and designers who you've just dissed by saying that a car isn't a creative work comparable to film.

Again, a song or a book is also a thing that once recorded and sold by the original artist/author can be passed from person to person with no monitary renumeration owed to the author. However, if you were to copy it and sell it, or re-record it and sell it you would owe royalties.

I know you can argue 'til the cows come home, but do you honestly believe a product like a car is fundamentally the same as a creative work published on paper or disk? Seriously?

[poppachubby]

It's true, if for nothing else than by law. A DVD is property in the intellectual sense. So physically it's yours but its contents still belong to its creator, much like music. A car has been designed and produced for you to own and drive. There is no creative statement or property to claim with a car. Once it's sold, that's it, all yours.

I know everyone knows this already, but it seems to have been overlooked...

[Geoffcin]

HA!! Yes, I actually do.

People (like you) have a tendency to think of industrial made hardware as "not really a creative work" when in actuality it's just as creative to design a water pump as write a song or book. When you see a patent on something it is protecting the rights of the inventor creative work, i.e. his or her design. Software like a film has the problem that it's more easily copied, but fundamentally it's the creative work in both that is what is protected.

[02audionoob]

In order to have a meangingful debate, certain fundamental issues eventually have to be accepted as common ground. You're so far off on the extreme end that now it's just a contradiction.

[Geoffcin]

It's true, if for nothing else than by law. A DVD is property in the intellectual sense. So physically it's yours but its contents still belong to its creator, much like music. A car has been designed and produced for you to own and drive. There is no creative statement or property to claim with a car. Once it's sold, that's it, all yours.

I know everyone knows this already, but it seems to have been overlooked...

A DVD once purchased is yours, just like a car or bottle of wine. You own it and can do with it as you wish. If you want to re-sell it even at a profit there's nothing owed to the original manufacturer. You cannot however copy what is on it and sell it, just like you cannot copy the technology in your car and sell it.

A car is just as much a creative statment as a film. If you copy all or parts of either and try to sell them you are violating the law.

[Geoffcin]

In order to have a meangingful debate, certain fundamental issues eventually have to be accepted as common ground. You're so far off on the extreme end that now it's just a contradiction.

I agree, we do need to agree on fundamental issues. I think we need to accept the fact that intellectual property is not restricted to software. It's a concept as old as the first patents. There is no fundamental difference between a patent on a light bulb and a book. You, after purchasing them from the manufacturer/author own them, and can do with as you like. However, the fundamental intellectual property, i.e. the design belongs to the creator of the product, you cannot copy it.

[02audionoob]

You're missing my point. An example of the fundamentals I'm talking about would be the difference between patent and copyright.

[bobsticks]

I'm sort of torn about this. I feel that studios have the right to distribute their media anyway they see fit and should be allowed to utilize the best strategy to allow them to make the most money.
At the same time, I use Redbox to "screen" what's purchase worthy and what's not. I guess that I'll have to wait then.

Yes...

[02audionoob]

It seems like NetFlix would be a bigger problem than RedBox.

[Geoffcin]

It seems like NetFlix would be a bigger problem than RedBox.

That was my thought at the begining of the thread. How can they embargo RedBox, and not do the same to the 800lb Gorilla in the room, NetFlix? Of course to block NetFlix it would really hit their bottom line. I'm not sure how many copies NetFlix buys, but it's got to be quite a large amount of initial sales.

[nightflier]

That was my thought at the begining of the thread. How can they embargo RedBox, and not do the same to the 800lb Gorilla in the room, NetFlix? Of course to block NetFlix it would really hit their bottom line. I'm not sure how many copies NetFlix buys, but it's got to be quite a large amount of initial sales.

...to netflix by picking on its little cousin.

By the way, the difference between a car and a movie, is that with a car you can make an exact copy of it and give it away. With a movie, you can't. As long as you're not selling the car or making a profit, this is legal. Of course, the assumption the car manufacturer makes is that an individual won't have the means to make copies of cars, but the cost of copying a movie is a different story.

By the way, you can't legally lend a movie to a neighbor, or anyone else outside your home, for that matter. It's to be viewed by one household only. You can make a "backup" copy, but again, that's only for use in your own home. What RedBox is doing is buying a home version of a movie from Walmart and Target, and then renting it out for viewing to multiple households. I'm not a legal expert, but I do believe that violates the rights of artists.

It should be interesting to see who wins this one.

[Sir Terrence the Terrible]

Another reason they may hold off a month before offering the titles to Redbox is piracy. Usually if a studio has a title copy-protected it's for the first 30-60 days when the majority of copies are sold. The studios are worried that mom and pop will rent the movie, rip it, then give copies to family and/or friends. This is where it really cuts into sells.

We copy-protected Twilight and saved Summit well over a million dollars in lost sales due to piracy within the first 60 days. After the initial time period subsequent reorders are either pressed without copy-protection or with protection, but not charged for it.

After 60 days either the ripping tools have created a work-around and updated their applications, or the buying frenzy is over and losses diminished. It's a continuous battle. We try something new. They break it. We do something else. Since we have to abide by the DVD standard, there will always be a way around the protection. We also have to make sure what we do doesn't cause playability issues. It's a delicate balance.

So I guessing it's not only the loss of sales due to rental warranting the action as much as the combination of rental and piracy.

Bingo, we have a winner here! In order to get Sony's, Lionsgate, and Disney's cooperation (we have no direct contracts with them) Redbox must A) Buy in bulk from a studio sanctioned distributer which increases our profit from them B) destroy all DVD's once a title falls out of favor with the consumer. They cannot resale, and they must provide proof that they have destroyed all discs and C) they must buy a broad selection of our titles, and not just the new releases or most popular titles.

We are closely watching their litigation with Warner, Universal, and Paramount. With alot of folks renting and ripping, Redbox is a big problem for the studios, and they just want Redbox to get in line with Blockbuster and Netflix on how DVD rentals are handled.

[Sir Terrence the Terrible]

It seems like NetFlix would be a bigger problem than RedBox.

Netflix is not a problem because they have negotiated contracts with the studio. Redbox does not. With Netflix and Blockbuster, the studios get a percentage of the rental income. With Redbox the studios don't. Redbox wants to play the game without following any rules, and that is a problem for the studios. If the three studios lose their case to Redbox, all rentals from all rental companies will be hit with a 30 day blackout across the board. I know that is going to be Disney's policy, and I have spoken to my counterparts at Sony, Lionsgate, Warner and Paramount, and they have confirmed that they will also institute a blackout period as well.