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According to Pali Capital analyst Richard Greenfield, an often outspoken critic of Redbox’s business model, the new 28-day Warner delay deal the company recently signed will bring benefits to Blockbuster Video, as well as VOD distributors and Apple. Home Media Magazine quotes Greenfield says that BB is “largely immune from the embargo by virtue of a multi-platform distribution strategy that allows consumers to rent and buy movies in-store, by mail, kiosk and electronically”.

In the wake of Netflix’s and Redbox’s delay agreements, Blockbuster will have the physical disc rental market basically to itself for a month after DVDs are released.
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Greenfield also said that “cable operators touting new-release movies day-and-date with packaged-media availability (a strategy spearheaded by Warner), as well as Apple’s iTunes store, will benefit from the expedited access to 20% of home entertainment’s annual releases, according to”.
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Says Greenfield:

“We live in an ‘I want it now’ world, and waiting 28 days for Harry Potter is simply not a compelling consumer proposition,”

Because Blockbuster rental transactions generate more profit for the studios that Redbox’s, Greenfield believes that BB will remain exempt from any new release embargo that might further injure the embattled company. According to Greenfield:

“We suspect the studios actually hope this stabilizes Blockbuster’s finances in the near-term,”

Greenfield also thinks that the month-long delay before new titles reach Redbox and Netflix will allow Warner (and other studios, potentially) to repurpose early returned discs and supply them to the two renters, which would provide significant savings. Said Greenfield:

“Studios could essentially utilize returns from the retail channel to fill the kiosks, as 28 days would be more than enough time to get Wal-Mart/Target returns processed — turning retailer returns into kiosk revenue,”

Is Greenfield right here, Insiders? Will ailing BB get a boost from Redbox and Netflix’s capitulation? Give your opinion in the comments.

(via Home Media Magazine)

19 Responses to “Analyst: Redbox Delay Window to Benefit Blockbuster”

  1. Visitor [Join Now]
    Robert [visitor]

    This is total BS and a shame that an overpriced video rental business is trying to force consumers to rent from them as overpriced as they are in this terrible economy. I really hope this just blows up in their faces!!!!

  2. Member [Join Now]
    MovieWatcherSupreme [moviewatchersupreme]

    I don’t know if it will have any major affect, but I can see it causing some issues, still depends on many other factors though. Maybe I missed something at some point, in which case I am sorry: but why is Blockbuster not susceptible to the delay?

    • Visitor [Join Now]
      rb [visitor]

      Not sure, but I think someone mentioned on this site that Blockbuster has a revenue sharing agreement with the studios for the movies they carry so that the studios are getting a piece of the $$$ rental action when their movies are rented at Blockbuster. Redbox doesn’t have rental revenue sharing with the studios which is why the studios put such pressure on Redbox to go with the 28 day delay or to raise their rental prices. At least this is how I’ve understood the discussions on this site :-) If this is so, what I also don’t understand is how BBExpress can only charge $1 and get new releases on day one because I thought the whole beef from the studios was that Redbox only charging $1 for new releases on day one cut into potential dvd sales for the studios. Seems that what the studios really didn’t like about Redbox is that Redbox wasn’t rental revenue sharing with the studios!

      • Visitor [Join Now]
        John Small [visitor]

        A couple of points.

        Redbox does having revenue sharing with some of the studios. Those studios were willing to take a much smaller minimum / turn from Redbox than Blockbuster is giving them. I suspect this may come back to bite them in the ass when their rev-sharing deals are up with BB.

        BB pays more to the studios (as do the indies) so they get preferential treatment. Redbox could have signed up for this as well but chose not to do so.

        If BB Express grows fast enough, you can bet that the studios will crack down on it as well. BB has already said that they would be willing to accept a 28 day delay on their kiosk title. You can’t blame them for not volunteering to do it if they do not have to do it though.

        Finally, you are somewhat correct RB about the studios and revenue sharing with Redbox. The studios were annoyed because Redbox was charging less per rental than BB (and the indies) were giving over to the studios for each rental. If Redbox had been willing to raise their price, they could have avoided this mess they are in. $2.00 for the first day and $1.00 for each additional day is still a good value for your entertainment dollar. Redbox wanted to keep it at $1.00 though and so now they have to wait. Which, frankly, is only fair. If Redbox doesn’t want to pay the same amount as everyone else, they should have to wait until the price drops.

        • Visitor [Join Now]
          rb [visitor]

          I don’t see how Redbox could charge $2 for the FIRST DAY ONLY of a new release and then go to $1 for each day if that person keeps the new release for say 10 days. The other 9 days that the person keeps the new release and is only paying $1 for each of those 9 days means that Redbox is LOSING a potential revenue of $2 per day from other customers if that person had returned the new release after day one and made that new release dvd available in the kiosk for other customers to rent. It seems that Redbox would have had to charge $2 for EACH of the first 30 days that a customer decided to keep a new release because each day that customer keeps the new release during those first 28 or 30 days he/she is keeping that new release from being available for others to rent at $2 a day. Redbox would lose revenue if they only charged a customer $2 for the first day of a new release and not $2 for each and every day that customer keeps the new release within the first 28 or 30 days of the new release. ???

          • Visitor [Join Now]
            John Small [visitor]

            You are confusing potential and actual revenue.

            If Redbox charged $2.00 for the first day and $1.00 for each additional day they would be gain revenue over what they getting right now. With that additional extra charge, they could have paid the studios the required rev-sharing fee and received about the same amount as they are getting currently for the $1.00 a day rate.

            The main benefit is that they could have stocked their machines with lots of copies of the hottest new titles from all of the studios which would have made their customers happy (even if they had to shell out $1.00 extra to get them)

          • Member [Join Now]
            MovieWatcherSupreme [moviewatchersupreme]

            Thank’s for the info guys, I was just lost their for awhile.

  3. Visitor [Join Now]
    Jonathan [visitor]

    Saw this coming from miles away, months ago.
    BB + Studios = Monopoly.

    Isn’t going to change my buying habits, however. I’m not impatiently waiting every new release. I can wait.

    • Member [Join Now]

      It would be cheaper to join online Netflex or Blockbusters for $8.99 a month if the prices are raised.
      I had a 30 day free trial at Blockbuster and rented a movie every night and out of all those movies there were about 4 that were worth watching.
      Most of them sucked big time.
      Just wait – unless there is a absolute for sure movie that is good – like Avator- then rent at Block Buster.

  4. Member [Join Now]
    ChadCronin [chadcronin]

    The studios stopped catering to my interests long ago. I can’t even remember much that is coming out let alone care about seeing anything day one. Nice to see that they are wasting time making a big deal out of pricing and windows. Never any talk about making better product to justify all this bs.

  5. Visitor [Join Now]
    Firstlawofnature [visitor]

    It’ll advantage the stores that survive but I think plenty of consumers will shift habits because they are not so excited to go back to the old prices and old stores. The words too little too late come to mind. Besides it’s only warner right now.

  6. Visitor [Join Now]
    gandhawk [visitor]

    Yes. The 28 day delay will benefit brick and mortar stores. I went to Family Video to rent “The Box” and “Vampire’s Assistant” this week. I have a Netflix membership and utilize Redbox frequently. I do not mind paying extra for a movie I want to see. The cost of renting a DVD from anywhere is a bargain with the price of movie tickets being so high.

  7. Visitor [Join Now]
    JaBone [visitor]

    What a load? What happened to free market? The first legimate challenge to come blockbusters way and instead of growing, adapting and delivering a better, more up to date product, they throw a fit and buy the upper hand. Sounds like a monopoly to me.

  8. Visitor [Join Now]
    cooldru2 [visitor]

    It looks strange 2 me. Of course it will impact redbox and customers. Blockbuster will rack up now. The large companies most of the time win.What can we do?

  9. Visitor [Join Now]
    Mainer [visitor]

    no big deal to me I am not going back to BB they stink way over priced and their late fee policy is horrible. they will be goin out of business no question just a matter of time. . .

  10. Visitor [Join Now]
    fourhispurpose [visitor]

    GREED is all I can say,I will purposley wait till after the “28 days”)Who cares if ya have to wait .And As far as the 2 dollar the first day 1.00 the second ,Doesnt make sense at all because I as well as people I know take it back the next day to save money if you were going to pay 3.00 you may as well go somewhere else.The whole great thing about redbox is to save money.I admire that they were willing to omly charge a dollar.For once someone wasnt being greedy!!!I think if more people were willing to go down on prices in every kind of market they would still do well or even better because more people would be there buying things!!!The power of not being greedy would prevail!!!