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The pendulum continues to swing away from the traditional sales and rental models preferred by the studios and towards the cheapness and convenience of Redbox and company. According to the Digital Entertainment Group, DVD sales plummeted 13.5%  during the first half of 2009, while, DVD rentals rose by 8.3%.

ostrich-757855“We fear that the industry will be trading sell-through dollars for rental pennies from here on out,” said Michael Nathanson, analyst at Sanford C. Bernstein, in a note to clients last week.

And as we all know, it’s not just declining sales that have the movie studios playing nasty with Redbox. Consumers are demonstrating their preference for cheaper, more convenient rentals more strongly than ever.

“Within physical rental, we think the advances of Redbox and Netflix are potentially understated by the data,” Nathanson of Bernstein wrote. “A bottoms-up view of the first half of 2009 underscores the continued shift away from traditional, in-store rental and toward Redbox and Netflix.”

Even with the sales numbers in their supple, moist hands, I don’t think most studio execs are going to embrace the new zeitgeist and look for innovative ways to take advantage of it. I do need to add that there are, thankfully, still one or two clear thinkers in Hollywood.

Burying your head in the sand and clinging to a dying business model is exactly what happened to the music industry earlier this decade. Hollywood execs should ask their buddies in the record business how well resisting change and ignoring customer trends worked out for them. I believe many of them can now be found working at McDonald’s stores that contain a—wait for it—Redbox. See how life serves up such tasty little ironies sometimes, Insiders? Your comments below, please.

[via The Wall Street Journal]

57 Responses to “DVD Sales Continue to Drop, Rentals on the Rise”

  1. Visitor [Join Now]
    Joey [visitor]
    I work for VBG. To find out why this is important, click here.

    DVD sales plummeted 13.5% during the first half of 2009, while, DVD rentals rose by 8.3%.

    Of course they did this is why the studios are denying red box it’s titles. Even if the rentals rose by 30% the studios would still be loosing money on the 13.5% decrease in DVD sales. Why would they support this?

    • Member [Join Now]
      realysmart

      Did anyone consider dvd rentals were on the rise because more people are out of work and have time on their hands. Which also plays into the falling dvd sales, since there are less employed they buy less and rent more?

      • Visitor [Join Now]
        John [visitor]

        Exactly, with people out of work and having less money to buy, rent. Oh, wait President Obama has the stimulus plan, people could use that cash. With blu ray and rumors of other media who wants to buy. They only end up at goodwill stores.

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

    Studios get a fraction of the rental revenue. Most of their income comes from the sales side of the equation. The sales drop is devastating for the studios.

    Redbox supporters are cheering the destruction of the very media they pretend to love. Movies will not be made if the studios can’t make money. And they can’t make money if people are only willing to pay $1.00 for a rental.

    Simple as that folks.

    • Visitor [Join Now]
      Joey [visitor]
      I work for VBG. To find out why this is important, click here.

      That’s all I’m saying

    • Member [Join Now]
      captmovie

      Baloney, movies rented for a $1 would not have been rented otherwise. Extra money for movie makers. Either that or they make nothing extra. Their choice.

      • Visitor [Join Now]
        Joey [visitor]
        I work for VBG. To find out why this is important, click here.

        Did you see that Red Box just rented their 500,000,000 DVD? Are you honestly saying that these movies wouldn’t have been rented or bought at retail if Redbox wasn’t here. GET A CLUE!!!! You know nothing about this industry. Did you see that sell thru is down over 13% and rentals are up 8%. Why do you think this is? Because Redbox is in full market share mode with these kiosk trying to reach market saturation, Trowing product out there for pennies and once again devaluing all packaged media destroying the entertainment industry…..

        • Visitor [Join Now]
          rumblefish [visitor]

          Joey

          Where do you get your movies? Just curious …and I apologize if you already answered this. You seem to be a regular here.

          Tell us the last 5 movies you purchased at retail or online, etc

        • Visitor [Join Now]
          John [visitor]

          With the crap that they are putting out who wants to buy it. Most of the new movies are a waste of film. I’ve rented some that Ican’t believe the actors even worked the movie.

  3. Visitor [Join Now]
    Curtis [visitor]

    Then studios should make better movies. I hate all this sequel remake crap!

  4. Visitor [Join Now]
    filmflam [visitor]
    I work for VBG. To find out why this is important, click here.

    I think that’s what we’ll be left with in the Redbox machines all crap

  5. Visitor [Join Now]
    Mike [visitor]

    Well they keep raising prices of Dvds and paying famous actors millions of dollars per films(which is just disgusting). It’s bad enough seeing them at the Oscars prancing around in expensive clothes while you got people barely making enough to survive til next week. If the movie industry wants to make more of a profit then they should lower the dvd cost (so more people will buy it) and the actor’s wages.(It also doesn’t hurt to make an original, unpredictable film). They almost have to squeeze every penny out of the audience that they can. I haven’t seen too many movies I’d like to pay 20 dollars to own. And if I did, I’d wait a few months and buy it cheaper on Amazon or Half.com.

    • Member [Join Now]
      moviecrazy

      Very well said! It’s just like the ridiculous salaries sports teams pay their players. I’m sorry but NOBODY is worth tens of millions of dollars to play a game! That’s why a lot of people can’t afford to go to sports games because the ticket prices are just outrageous! NOBODY in ANY sport should be payed for than 500,000 dollars a year. I mean come on their playing a sport they love to play and that they played for free as a child. That’s why everything is so ridiculously priced now because they pay all these players so much money! It’s the same thing with the actors and directors, there’s just no need to pay them so much!

      • Member [Join Now]
        gtoal

        Sport teams don’t charge high admission because they need to pay overpriced players. They pay overpriced players because they can charge high admission.

        This happens in areas such as Dallas and San Francisco because of a small minority of very highly paid people who don’t think twice about paying four figures for a good seat.

    • Visitor [Join Now]
      Joey [visitor]
      I work for VBG. To find out why this is important, click here.

      The percentage of actors who make the millions is minute under 2%. What about all the below the line people? The guy who makes the sets,holds hte lights, behind the camera? This industry support untold amount of average everyday people who this is going to affect, Who REDBOX is affecting with the devaluing of all packaged media!!!!!!!!!!!!!!

      • Member [Join Now]
        moviecrazy

        Yeah, whatever…you’ll never get it will you?

      • Member [Join Now]
        moviecrazy

        In fact couldn’t they take that (supposed) 2% they pay the high priced actors and use that to compensate for the “devaluing” of the POOR media industry!

        • Visitor [Join Now]
          Joey [visitor]
          I work for VBG. To find out why this is important, click here.

          I think it’s you who dosn’t get it. A destroyed entertainment industry means no over paid actors, No red box, no brick and morter, fewer entertainment options, fewer movies, less jobs, less studios.But at least moviecrazy gets to rent his movies for a $1 a day for a while and enjoy his association with redbox

          • Member [Join Now]
            moviecrazy

            That’s exactly right, that’s all that’s important to me, that I get my movies for a FAIR AND REASONABLE PRICE, not the RIPOFF PRICE that they have been charging me and everyone else for years!

          • Visitor [Join Now]
            rumblefish [visitor]

            Joey

            You have valid concerns but this notion of a destroyed entertainment industry is silly. You’re being overdramatic. There are too many people with too much invested. Something will level out…and if you think redbox bumping their prices to even $3 a night is going to fix the ills of the movie industry you are kidding yourselves. Things will change ..they always do in this industry. The music industry has continued and artists are still making music and selling CD’s….it was a shock to face a new reality but it’s working for them…they are still multi-millionaires. Just try not to think that redbox is the one evil out there ruining things because you’re overlooking so many more things that need to be worked on. This is about the people currently in the industry with cushy jobs who have now been challenged to produce top notch content and think outside the box and are freaking out. When they leave, someone else with a better idea will step in and take over.

          • Administrator
            Michael [administrator]

            rumblefish:

            That is pretty much exactly what I was going to say. This same kind of thing started happening to music almost 10 years ago, and guess what, music is still being made! The movie industry is not going to dry up because of Redbox or Netflix – it is going to adapt and change.

            Those who jump on board the “change” train are going to be around for a long time to come. Those who try to stop it, well… we know what it’s called when someone jumps in front of a train on purpose: suicide.

          • Visitor [Join Now]
            Joey [visitor]
            I work for VBG. To find out why this is important, click here.

            Well I think red box is about to get booted off the train. Your right about adapt and change. That’s what they are doing — Red box came along and now the studios are adapting to how they are willing to work with them.

          • Visitor [Join Now]
            John Small [visitor]

            This is very true. Are all the people on this site claiming that a DVD rental is not worth $2.00? That is $1.00 an hour for an entertaining time which seems incredibly cheap to me.

            At $3.00 a rental you are talking $1.50 an hour for some fun. What else can you do in the real world for $1.50 an hour that is as entertaining as watching a movie?

            The studios know that people are willing to pay at least $1.50 an hour to be entertained. They will do what they need to do to make sure Redbox either steps up and becomes a proper partner or gets crushed and left in the trash heap.

          • Member [Join Now]
            Carson [carson]

            I only watch dvds BECAUSE they are free, I see about 2-3 movies a week, so all the major releases, and after about 50-75% of them, I’m glad I didn’t pay anything for it. When the freebies run out, I’ll have to be very discriminative about my movies. I’ll watch crap for free, but I’m not going to pay to waste my time.

            Now if only other stuff was as easy to get for free as DVDs…

            By the way, I know that I am a cheap-ass and am in the minority… =)

          • Visitor [Join Now]
            Joey [visitor]
            I work for VBG. To find out why this is important, click here.

            I hear your neighbor just hooked up cable to maybe you can run a line over?

          • Member [Join Now]
            Carson [carson]

            No, his is wireless, no cable needed… ;)

          • Visitor [Join Now]
            Mike [visitor]

            go to the cheapy shows ( movies that aren’t at the regular theaters anymore but aren’t out on dvd yet.) It’s still at a movie theater but it shows the movies I just described. I’ve gone to ones that are a 1.50 on Wednesdays and 3 bucks the rest of the week. If your going to let them charge 2 bucks for a one night rental soon enough they’ll be asking for three bucks and see how much People are willingly to give away.

            Like ten years ago it used to be 4.50 to see a Matinee Movie, now it’s 6.50. That sways me towards DVD rentals but not if your going to charge me almost a third of owning the DVD which I could have swore Blockbuster does (Isn’t it like 4 or 5 bucks for a 2-day new release). I only need one day to see a movie. At least with Redbox you’ve only invested a Dollar if the movie you see stinks. The last thing I feel like doing is paying the movie industry more money to see a movie cause I don’t think they’re struggling. And if they are they should cut costs to some of the actors (they get Millions per film) instead of charging us more to see it. I just see the Movie Industry as incredibly greedy.

          • Visitor [Join Now]
            Sean [visitor]

            The studios and traditional rental stores who are complaining about rdbox, it’s their own fault things got his way. I used to rent new releases for $2.99 each for like three days, and I never complained. And catolog movies were $1.00 each. It’s when they started raising, rasing, and raising prices when I got angry. Now even the old movies are $2.00…ridiculous. They did it to themselves. I would still be renting for three bucks a piece now if they didn’t start all this and motivate companies like redbox to start doing business the way they do. BUt redbox CANNOT raise their price and still get customers like me. Like I said, I used to pay three bucks, but it was for three or five days. For one night I WILL NOT pay more than a dollar.

          • Visitor [Join Now]
            rumblefish [visitor]

            Now thats a great point Joey. The studios are fighting back to keep things tipped in their favor and redbox is also. The courts are deciding since the practices being used are in question in terms of their legality.

    • Visitor [Join Now]
      Jody [visitor]

      That pretty much sums up how I feel too. It’s as if some people have no clue what it’s like to live paycheck to paycheck.

  6. Member [Join Now]
    ChadCronin [chadcronin]

    I have no pity for them. The product costs too much. The actors they pay too much money are ones I avoid. Most movies now are less interesting. I used to spend time writing studios telling them what I want to see in movies and they never listen or care. I refuse to buy the “bargain bin” movies @ Walmart after seeing some of the extremely cheap replication machine quality they produce. I only bought movies cause I wanted them in High Quality on Blu-ray. Most aren’t worth buying, so thank Heaven for Redbox. Without them I’d be spending more time on the internet watching clips.

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

    And you all wonder why the studios do not care if they piss you guys off?

  8. Member [Join Now]
    alans613

    Let’s not forget how much the greedy studios make at the box office with $10-$15 admissions. Also people have much less disposable income than they did in years past, so Redbox is the preferred method of rental for $1 a night, and you can return the movie at ANY location. The movies of today just aren’t as good or worth buying as in years past either. Either pay the greedy actors and directors less or deal with losing money. Your choice studios!

    • Visitor [Join Now]
      Joey [visitor]
      I work for VBG. To find out why this is important, click here.

      The percentage of actors who make the millions is minute under 2%. What about all the below the line people? The guy who makes the sets,holds the lights, behind the camera,retail,brick & morter, The high school kid behind the counter? This industry support untold amount of average everyday people who this is going to affect, Who REDBOX is affecting with the devaluing of all packaged media!!!!!!!!!!!!!!

      • Visitor [Join Now]
        Jody [visitor]

        Obviously it’s time to start finding ways to lower costs of making the films, and cost of Dvd’s. Quit trying to put this problem all on Redbox.

        • Visitor [Join Now]
          rumblefish [visitor]

          Joey
          You miss my point. All those people will still have the same jobs and make the same minimum wage they are making now. The difference will be that we wont have a talentless “Shia Lebouf” making $10 million as the lead actor….it may be a new guy or someone else who they pay $2 million. You miss the point…the movies WILL STILL GET MADE….they will just get made for a more reasonable cost. The only ones suffering here are the rich….not the people you mention.

          You never answered the question of the last 5 movies you watched…and how you acquired them. Purchase? Rental? Where? How? I think everyone here finds it curious as to why you won’t answer……and at this point, your answer is meaningless. Your silence says it all. Hypocrite.

          • Member [Join Now]
            moviecrazy

            That’s just it, Joey ALWAYS misses the point. He just doesn’t get it, never has and NEVER will!

          • Visitor [Join Now]
            Joey [visitor]
            I work for VBG. To find out why this is important, click here.

            I bought State of Play at Best Buy what the hell does that have to do with anything. I also bought a 4 for $20 set of previously viewed, one was barbie. Again what does that have to do with anything?

          • Visitor [Join Now]
            Joey [visitor]
            I work for VBG. To find out why this is important, click here.

            What is it rumblefish you have no opinions of your own (except actors make to much money not fair) that you want to try and invalidate my points because of the movies I watch, rent or buy? What are you 5 yrs old? It’s not fair waaahhh. Get a life & take your shill with you “Movie Crazy” Oh that’s right you guys are the same guy you just punch in under different names and agree with yourself.

          • Member [Join Now]
            moviecrazy

            Joey, you’re an idiot! And why on earth are you devaluing the packaged media by only paying $5 for a movie! Oh my god, you’re going to DESTROY the movie business because you’re DEVALUING PACKAGED MEDIA by only paying $5 for movies!!!! Why aren’t you practicing what you preach? Seems to me you’re part of the problem, not the solution! Oh and by the way MORON, were are NOT the same person….I knew you weren’t too bright, but I didn’t know you were that stupid! Now do you get why “rumblefish” (not me!) asked you what movies you rented or bought? Probably not. He was probably just trying to get you to QUIT DEVALUING PACKAGED MEDIA, but you just keep on doing it anyway, you should be ashamed of yourself!!

          • Visitor [Join Now]
            rumblefish [visitor]

            I was simply curious as to what YOU do for watching movies. Buying State of Play for full price at Best Buy definitely supports your argument. Buying used movies for $5 each is something the studios claim is killing the industry but you saw it as a great value so you did it. In their eyes..if those 4 movies you bought were not out there you would have paid full price to buy them new…
            Those 4 movies had nothing to do with redbox ..but I bet you’d never pay full price for them so YOU and BEST BUY have, as the other guy said, now devalued packaged media…congratulations!

          • Visitor [Join Now]
            rumblefish [visitor]

            and I am not saying actors make too much money as a generalization ….You seem to support their ability to get the best deal they can no matter what affect it has on the economy….raised prices at the box office and retail, etc
            But now that something has come up that will eventually push back and force the studios to make less on movies and hence, pay less to actors…you are up in arms. Unless you are a Hollywood agent or an actor yourself or have a job at a major studio I really dont see why you are so concerned. Movies will still be made dude! relax!

          • Visitor [Join Now]
            Joey [visitor]
            I work for VBG. To find out why this is important, click here.

            You two are complete idiots aren’t you? By buying Previously Viewed movies I am supporting my local Video Store and my community. Not to mention the titles I bought were older titles not New Releases. But I guess it dosn’t matter what answer I give you want to make it look like I’m a hipocrite. My points are valid you know it, everyone who reads this site knows it, and most important I know it. Good luck in your attempts to save your $1 a day rentals of new releases because you are fighting an entire industry that has allready identified Redbox as a detrament to this industry.

          • Administrator
            Michael [administrator]

            Hey Joey, I was just writing a response to your comment, but it got a bit long so I turned it into a post instead.

            Check it out here…
            http://www.insideredbox.com/movie-studios-vs-redbox-what-are-the-real-options/

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

    We know that you do not pay Carson. That is why your opinion is worthless on this site.

    The studios do not and should not care about you because you hold no value to them.

    Redbox should not care about you either because you cost them money.

    I have no problem with you getting your movies for free but you should understand that it means that your opinion simple does not matter.

    • Visitor [Join Now]
      rb [visitor]

      Tell this to Judge Judy! She says the law is that even deadbeat (non paying child support) dads are entitled to have opinions, a say in, and take part in the child’s life/upbringing. Therefore, I’d say that Judge Judy would rule that a Redbox non-paying, promo code- only using customer is still entitled to an opinion about Redbox! Besides, opinions are like belly buttons–everybody has one!

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

    If you are unwilling to pay for your product then you should not be surprised when the studios and Redbox refuse to listen to anything you have to say.

    Redbox likely hates you Carson. You are destructive to them. Even more so than to the studios.

    • Member [Join Now]
      Carson [carson]

      You have a very valid point, I should not have said anything, the more I brag about freebies, the more likely they will end….
      sorry if I am ruining it for everyone that does the same thing I do…

  11. Member [Join Now]
    Carson [carson]

    No, his is wireless, no cable needed ;)

  12. Visitor [Join Now]
    Joey [visitor]

    All I spread is FUD. The sky is falling!

    Won’t someone think of the “industry” people? How will they pay for their 29th Maserati and that umpteenth house in the Hamptons? Next thing you know, you’ll want them to fly first class on a commercial airline instead of their fractionally-owned jets. Someone whip out the 8th amendment (cruel & unusual punishment) and save the movie execs!

    When is the bailout for “entertainment industry” folks coming?

    Again, if the entertainment industry thinks that their product should be $Y/unit, I don’t think anyone is stopping them from doing so. Raise prices. See what happens.

  13. Member [Join Now]
    Schnarr [schnarr]

    Hey Guys,

    I’m luvin this “ping-pong” series………… I don’t need to watch a “C” or “D” rated movie when I can tune in to this and enjoy the comments.

    For my $.02, the movies are well worth $1.00 rental……. I wouldn’t rent for more, unless it’s a movie I held off seeing at the theatre so I “could” rent from Redbox.

    Redbox has been very fair to me and a lot of you other “rental customers”, thank you very much to “Michael, the starter of Inside-Redbox”.

    I’m used to renting several movies a week. The promo codes help a lot now that my spouse and I are totally retired. And it’s super when the g-kids come over and we can treat them to a movie and popcorn in the family room.

    (By the way, the actors and actresses and sports people are paid rediculous salaries, AND, a lot of you younger folks don’t realize how “lousey and spoiled” they are now a days. Years ago, when they were making a “lot” less, you could approach them and get an “autograph” and they were thrilled to give it to you. Now a days, you have to “pay” for one??? I’d spit in their face before I’d pay for an autograph.)

    We were in Las Vegas and saw ‘Pete Ross’ eating in one of the restaurants with a couple of guys and a young kid, ‘about 6yrs’ old asked him for his autograph and he said to the kid, “is that your dad over their with you? Ask him to bring you down to the sports store a few doors away, I’m selling my autograph there. I wanted to go over and give him a piece of my mind, but it wasn’t my g-kid so my wife asked me to butt out, but I won’t forget that too soon. The more money they make, the more “ungrateful” they are.

    Sorry to have rambled on guys……………

  14. Visitor [Join Now]
    Rob [visitor]

    The economy is partly responsible for the shift from sales to rentals. Who can afford to buy a movie these days. Blockbuster was in trouble long before Redbox came along. I rent more movies now because of Redbox. I usually only bought movies from the $5 box at Wal-Mart. The studios should rethink their business model now. Who knows where this technology will go tomorrow.

  15. Visitor [Join Now]
    sandy [visitor]

    I never paid full price for a dvd. Used is just as good as new that’s why we have E-Bay And Amazon and pawn shops and yard sales and cable and yes Redbox. My point is people are not walking into Walmart and paying full price for a dvd they can get cheaper anywhere else and who’s going to pay full price and then some at a movie theatre. The movie industry needs to start putting the blame on themselfs. Someone dropped the ball and know it’s the blame game. The bottom line is they didn’t come up with the $1.00 movie first. I agree with Mike the industry is greedy cut back on hiring top dollar stars. Except the top dollar star sells the movie. So it’s a no win situation . The industry needs
    to make the movie so we can watch the movie.

    The only solution I can think of is: 1- the movie industry starts rethinking their sales plan and starts looking at the whole picture.
    2-They stop selling to redbox.
    3- Redbox stops dealing with big name greedy companies and goes more independent.