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Warner and other studios’ efforts to create new release sell-through-only windows may go beyond simply trying to squeeze a few more dollars out of a declining format. Several industry analysts believe that creating a digital window may also weigh heavily in the studios’ actions.

According to Wedbush Morgan analyst Michael Pachter, studios usually retain about 65% of the revenue from the video-on-demand and pay-per-view formats, versus 35% from disc rental. Says Pachter:

“It is clear that the movie studios dislike the [traditional] rental model . . . From a studio perspective, the most desirable distribution channels are those which provide the largest revenue share.”

Kevin Tsujihara, president of Warner Home Entertainment Group, mentioned the anticipated boost to VOD in comments made after yesterday’s Redbox announcement:

“The 28-day window enables us to get the most from the sales potential of our titles and maximize VOD usage,”

Richard Schackart, digital analyst with William Blair & Co., also believes that the new window makes digital delivery the most attractive rental option for new release content. Schackart thinks that the window will also benefit Best Buy when it introduces its VOD digital store and accompanying devices this summer. Said Schackart:

“We believe Best Buy and studios will make content available at attractive prices, potentially including free downloads or streams with purchase of dedicated hardware,”

Insiders, do you think these analysts are right, and this new deal will help usher in the age of digital delivery even more quickly? Give us your take in the comments.

(via Home Media Magazine)

7 Responses to “Analysts: Digital Window a Byproduct of Redbox/WB Deal”

  1. Visitor [Join Now]
    Bob [visitor]

    No it will not make a difference. I will just wait for the 28 days to go buy. After I wait the 28 initial day period every movie will be a new one for me!

  2. Visitor [Join Now]
    James [visitor]

    I will be shopping at BlockBuster Express for the hollywood three new release DVD’s…

  3. Visitor [Join Now]
    Firstlawofnature [visitor]

    It’s possible that will be a byproduct of the new window. Will studios price it cheap enough to really drive usage? Probably not.

  4. Visitor [Join Now]
    Visitor [visitor]

    The studios offer download “rentals” through many avenues today but at prices that are already around 25% of the retail price for the movie and require quite a large bandwidth pipe or planning ahead of time (1hr for us with 6Mbps DSL) and typically only allow for SD content, HD costs more or is not available. We get less quality, higher cost and it takes longer to watch, hmmm…

  5. Visitor [Join Now]
    Theyre Desperate [visitor]

    The studios are getting desperate, there is no way this will lead to more revenue as it is a risky enterprise. I personally don’t care, I have never ordered Pay-per-view in my life and never will use VOD. Going from raw video to compressed video has already been bad enough – I have been watching the Olympics on DirecTV High-Def and at times the compression artifacts are so horrible, it might as well be in standard def. Imagine how bad VOD will be – with the way broadband is developing in the US (Japan has had 10 times higher speeds on average for years and it hasn’t caught on).

  6. Member [Join Now]

    Let me get this straight…they are pushing downloads of the movies now over the higher quality DVDs and Blu-Rays, at a time when internet providers are beginning to place more stringent caps on bandwidth. Not sure thats the smartest business move. Downloads are nice but have such quality degradation that I would never consider it as my initial viewing option. Seems we are going backwards.

  7. Visitor [Join Now]
    China Kulis [visitor]

    I do think diferrent because my friends use another product like louisville .It’s pleasant and save prices.But next ladder I am going to consider this werner for which you present.Thank!!!