Well, it's final: New releases from Warner Home Video will not be cheaply rentable until four weeks after the DVD is released in stores.
In January, Netflix acquiesced to the studio's demands and imposed a 28-day rental blackout for new release Warner films; and yesterday, the results of the Warner/Redbox lawsuit were released, showing that Redbox will be doing the same.
Hollywood studios are of the opinion that low-cost rentals such as those from Netflix and Redbox actually devalue new releases, and that a four-week window will encourage full-price sales of the films. Redbox disagreed with the notion that its service undercuts full-price DVD releases, and sued Universal, 20th Century Fox, and Warner for the right to get DVD new releases at the same time as traditional rental outlets like Blockbuster.
The suit with Warner in Delaware District Court has ended with Warner's 28-day blackout still in place, where Redbox does not get new DVD or Blu-ray titles immediately, but is guaranteed wholesale prices on the discs it buys when they become available.
Though the outcome of the suit is effectively a draw, the result was actually a pretty sound defeat of Redbox's accusations in court.
"Redbox never addresses the critical fact that it has signed a number of direct deals with studios that effectively lock up over 50% of the supply of 'new release' DVD titles it seeks to carry; it never addresses the statements sprinkled throughout its own public filings and pleadings attesting to the explosive growth its DVD kiosk business has experienced throughout the same period of time that Warner, Fox, and Universal kiosk distribution policies have been in effect; it never asserts that a single one of its kiosk customers has actually been unable to obtain a Warner title or had to pay more for a Warner title since the implementation of Warner's policy; and finally, it ignores the numerous inconvenient public admissions made by its parent company that its DVD kiosk business competes with a wide variety of distribution channels, technology, and content in the 'highly competitive' home video industry," according to testimony from Warner Home Video officials last week.
In the end, Redbox has come out with a single benefit in that it can once again stock its kiosks with Warner titles at cheaper wholesale purchase rates and not bulk retail rates.
Unfortunately, nothing has changed for the consumer. Titles still cost $1 at the kiosk, and their availability is still delayed.
Mitch Lowe, President of Redbox said, "By agreeing to a delayed release date, Redbox can now acquire Warner Home Video titles at a reduced product cost, preserving value for our consumers and increasing customer access to Warner titles at Redbox locations nationwide."
So who really benefits? Redbox and its investors.
"The agreement is accretive to EBITDA, and removes the risk of buying and selling DVDs on the open market," Ari Black of Thomas Weisel Partners today wrote today. "We believe there is now a lot more certainty that Redbox will be able to maintain margins going forward."
Copyright Betanews, Inc. 2010