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Iger pictured at left

One of the most fascinating aspects of the ongoing drama of the past year between Redbox and Hollywood has been the disparate attitudes of the various studios. For every Warner or Fox trying to bring Redbox to heel, there’s a Lionsgate or Sony willing to work with the kiosk company. For Redbox fans, Disney is one of the “good guys”—a position confirmed by studio chief Robert Iger’s comments at the recent Sanford C. Bernstein Strategic Decisions conference.

In his remarks, Iger said that Disney has not experienced any cannibalization of new release sales from Redbox. Iger went on to say that the discounts Redbox has received on products from other studios in exchange for delayed release windows would not be acceptable to Disney. Said Iger:

“We would not have made as much money . . . Selling them units at a 50 percent reduction in cost, or whatever the proposition, even for the 28-day window was not an equation that made sense to us.”

What do you make of Iger’s remarks, Insiders? What, if anything, would cause the studio to go down the delayed release window road with Redbox? Or is Disney’s sell-through of its library of child- and family-friendly titles sufficient that it would never need to make such a move?

(via Business Week)

26 Responses to “Disney CEO: No Sales Cannibalization from Redbox”

  1. Visitor [Join Now]
    firstlawofnature [visitor]

    Cute…Iger pictured at left. John Small on the right. He’s trying to whisper to Iger that Redbox is destroying his business.

    • Visitor [Join Now]
      John Small [visitor]

      Pooh has more brains than you do FLON.

    • Visitor [Join Now]
      Firstlawofnature [visitor]

      Brains…you claim to have them but Coinstar shares are up about 100% since you said their business was about to implode. What other companies do you think are in danger because I may want to buy them too.

      • Visitor [Join Now]
        John Small [visitor]

        Bet you thought the real estate market would go up forever too.

        Pop, pop, pop.

        • Visitor [Join Now]
          Firstlawofnature [visitor]

          Nope. Avoided real estate and avoided your recommendation to stay away from Coinstar. Your analysis of the company’s prospects are worthless.

          • Visitor [Join Now]
            John Small [visitor]

            Lucky for you I’m not charging you for them then.

            If you wish to be willfully ignorant that is up to you. The numbers are all there plain to see. Your analysis was painful simplistic and horribly wrong-minded.

            I do not wish you ill though and hope that you do sell at this inflated price as the future looks increasingly dim for Coinstar.

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            Spinner – if the numbers are in plain site and obvious why did you have such difficulty using them to show everyone how bad Q2 was for Redbox? I’m still waiting for your analysis there.

            As others have said it is painfully obvious that you dislike the low cost distribution channels that consumers seem to love. Sorry but the good old days of fat margins for the studios ain’t NEVER coming back. That’s how things work in capitalism.

          • Visitor [Join Now]
            John Small [visitor]

            What numbers are there to show other than the ones that Coinstar reported?

            You tried to spin numbers into something that looked positive while ignoring most of the costs related to the business.

            It is simple, Coinstar makes next to no profit on their Redbox machine. They will make your investment go bye-bye.

          • Visitor [Join Now]
            firstlawofnature [visitor]

            ‘You tried to spin numbers into something that looked positive while ignoring most of the costs related to the business.’

            Absolutely false. I did not ignore any costs.

            ‘It is simple, Coinstar makes next to no profit on their Redbox machine’

            Use actual numbers to prove or partially prove your point. What is there to lose by doing so?

          • Visitor [Join Now]
            firstlawofnature [visitor]

            From you in May 2010…

            ‘‘As long as Coinstar is not playing games with their YOY deprec. calcs, you are correct that they are making a profit on a per machine basis.’

            Now…

            ‘It is simple, Coinstar makes next to no profit on their Redbox machine.’

          • Visitor [Join Now]
            John Small [visitor]

            The numbers are in their Quarterly report. No need to repost them here.

            The statements are not mutually exclusive even though you seem to think they are.

          • Visitor [Join Now]
            Firstlawofnature [visitor]

            You are such a spinner. The numbers as stated were great. If you want to show how bad they were the burden is on to explain yourself. Of course you will not do this because the facts do not support your distaste for a certain low cost distributor.

  2. Visitor [Join Now]
    Beebop [visitor]

    He’s much more cuddly than I thought! HAHA

  3. Visitor [Join Now]
    Dave P. [visitor]

    I hope Warner and the other hold-outs totally fail with their 28-day window policy. I haven’t minded waiting a month for new releases from Netflix. I just find other movies to watch during that month. If they think everybody’s going to go out and buy their DVDs, 90% of which suck, they are wrong. Neither is anybody going to pay $4.50 a night (with late fees) to rent anything but the biggest hits out there.

    • Visitor [Join Now]
      rb [visitor]

      It will be interesting to see in around 6 months or so just how the 28 day delay has affected dvd sales for the studios. Don’t think the studios should celebrate yet or do a ‘I told you so’ if dvd sales are up this past month or so because a lot of people buy the dvds around this time of year that just won academy/oscar awards regardless–without renting them in the first place. Disney movies/dvds should always sell well, as stated, because they have family/kid friendly content that can be utilized, again and again, as a cheap babysitter…

      • Visitor [Join Now]
        John Small [visitor]

        Again RB, this is not just about sales to customers but also sales to other rentailers. Those willing to pay full wholesale cost or revenue share.

        • Visitor [Join Now]
          RunninWild [visitor]

          So do you assume redbox is not revenue sharing with these new deals?

          If revenue sharing was SOOOOOOO important to the studios do you think they would have signed deals without it?

          • Visitor [Join Now]
            John Small [visitor]

            RB is rev-sharing with some of the deals they signed at terms not offered to other companies. The studios without windows will have to face the music when their contracts come up for renewal with other rentailers.

            Offering RB a deal is short-sighted in the extreme as time will prove out.

          • Visitor [Join Now]
            RunninWild [visitor]

            Other rentailers?

            Lotsa choices out there…I dont think the studios are too worried about those dreaded OTHER rentailers anymore.

  4. Visitor [Join Now]
    Wesley [visitor]

    I think you hit the nail on the head about children. Parents want to own the movies their children watch because children watch movies over. And over. And over. And they want to watch them at random times and you don’t want to run out to Redbox (or wait for Netflix) when your kid has a whim.

    The other studios are marketing to people (for the most part) with taste, and budgets, and experience with movies so they know what sucks or not. For them, you might rope in a few with a good trailer but if you can rent the movie for a buck on release day nobody’s going to believe a trailer. They’ll pay $1 and watch the “extended trailer” that is the movie itself, and then realize what a piece of garbage it is.

    Or, in some rare cases, they’ll like it and then the next time they want to see it, they’ll buy it. But for that the movie has to be good and Hollywood isn’t so in to making good movies any more.

  5. Visitor [Join Now]
    John Small [visitor]

    from http://www.homemediaentertainment.com

    “The analyst said first-day sellthough data on Alice “significantly” underperformed relative to its box office clout, citing industry contacts.

    “While we cannot prove that Redbox and Netflix availability contributed to this shortfall, we feel confident that they did not help,” Greenfield wrote in a blog post.”

  6. Visitor [Join Now]
    therealstory [visitor]

    The day Redbox said it would soon roll out Blu-ray Disc movie rentals for $1.50 daily, BTIG Research analyst Richard Greenfield issued a line-item critique of The Walt Disney Co. CEO Bob Iger’s apparent support of kiosk vending.

    The studio and kiosks became a hot button issue among some analysts when Disney bowed the year’s top-grossing theatrical release, Alice in Wonderland, in kiosks on the June 1 street date. Conventional wisdom suggested Disney would erect a 28-day Alice delay to kiosks and Netflix, similar to what 20th Century Fox Home Entertainment did with Avatar.

    At a June 2 investor event, Iger, without mentioning Alice, said the studio had seen no significant cannibalization of Disney packaged-media sales by Redbox kiosks. He said a 28-day window would not allow the studio to make as much as does currently.

    Greenfield and others worry that an increasing consumer shift toward $1 rentals versus DVD/Blu-ray sales could subvert the entire movie industry by undermining the current margin-based distribution (“window”) hierarchy.

    Indeed, during a recent media presentation, Time Warner presented a bar graph slide underlining the dollar contribution from a typical packaged-media rental and sellthrough transaction.

    Kiosks contributed $1 per transaction, compared with $1.25 for subscription services such as Netflix, $1.45 for a typical video store and $3.50 for transactional video-on-demand (VOD). Sales of a DVD contributed $12, Blu-ray Disc $15, and electronic sellthrough $17.50.

    The analyst said first-day sellthough data on Alice “significantly” underperformed relative to its box office clout, citing industry contacts.

    “While we cannot prove that Redbox and Netflix availability contributed to this shortfall, we feel confident that they did not help,” Greenfield wrote in a blog post.

    The analyst said cannibalization at Walmart is inevitable given the prevalence of Redbox kiosks at the retail behemoth’s stores.

    “Even if Disney is being honest about [the] lack of cannibalization, why not put in place a window to increase sell-through volumes above current levels, especially on key titles such as Alice in Wonderland?” Greenfield wrote

  7. Visitor [Join Now]
    Firstlawofnature [visitor]

    ‘Even if Disney is being honest…’. Unreal. What possible incentive would Disney have to act in a way other than its best interests? By definition Disney must believe it comes out ahead by acting in the manner it does. This analyst believes Redbox does more harm than good and that’s fine but not every studio shares his view. He needs to accept that.

    • Visitor [Join Now]
      John Small [visitor]

      I think he is confused because Disney is saying one thing while the facts say another.

      I know you don’t like to let facts get in your way but the intelligent people out there do.

    • Visitor [Join Now]
      firstlawofnature [visitor]

      Yes both you and him know better than Iger.

  8. Visitor [Join Now]
    gandhawk [visitor]

    There is a difference between most Disney movies(or other children’s animated movies). A child will watch a Disney movie over and over again prompting people to buy the movie. How many times are you going to watch Avatar or Sherlock Holmes. Disney movies have a history of lasting generations. How many other movies can say that. I purchased the Disney movies on VHS and then DVD. Now I am buying them on Blu-Ray. My grandchildren are watching them now. Over and over again. Most movies are renters. Disney are keepers.