The last two days have seen some major developments in the Redbox vs. studios drama. Both Fox and Warner Brothers have filed motions to dismiss Redbox’s lawsuits against them, which Fox has referred to as “meritless”.
In Fox’s filing, the studio stated the following reasons why it feels Redbox does not have a viable case:
—It hasn’t refused to supply Redbox with DVDs—the two companies just could not agree on pricing and other terms.
—Fox could have chosen to keep all its movies out of Redbox’s kiosks once the negotiations fell apart, but it didn’t. Instead, it told third-party distributors to wait 30 days after a DVD release before they could sell it to Redbox
—Antitrust law does not require a seller to make its product available to a buyer on all the buyer’s terms (price, distribution channel, or date); it’s only applicable if the deal terms “injure competition.”
On the Warner side, their filing had the following to say:
“By transforming a business negotiation relating to the terms with which it may deal with Warner into an antitrust suit, Redbox hopes to gain leverage at the bargaining table,’ . . . “Assisting one party over another in business negotiations is not the purpose of the antitrust laws. Nor are they meant to protect any particular merchant’s margins or input costs.
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Indeed, the antitrust laws are intended to protect competition and are indifferent to the fate of any particular merchant. It is therefore no surprise that Redbox’s allegations against Warner fall far short of what is required to state an actionable claim.
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”
These motions contain some interesting arguments, but it remains to be seen if the studios will be successful in having Redbox’s suits thrown out. Many commenters on this site have already made up their minds which side of this fight they are on. The question is, does hearing more of the studios’ side of the argument now change your opinion in any way?
[via The New York Times, Video Business and Paid Content]
It does not change my opinion, and this is why: If it was really about fair deals to the studios, than they would have fought redbox right from the beginning. They only started hating on redbox once RB started getting really big. It’s clear what this is really about. They saw redbox making lots of money and they wanted more of it. It’s not even really about the $1.00 rentals either, for the same reason. They would have had a problem from the beginning. It’s not even a lower price…yeah it’s a buck, but it’s for ONE NIGHT. Redbox brings in more money for one particular disc in a week than Blockbuster does in two weeks, considering their no late fees policy. So no, none of this changes my opinion on the matter. If they wanted redbox to pay more for their DVDs, they should have said so from day one, not just after redbox starts getting big.
Have you data to back that up?
Sean, you just answered your own comment. The reason the studios want more now, is that they realize they can get more. That is what businesses do. If they see the demand exceeding the supply, they can charge more for the product. That is all the studios are doing. And each studio is choosing a price based on their business needs. And in business there is nothing wrong with offering one price at the start, realizing it was too low and raising it later.
Ok, I answered my own comment…but since it was actually a statement answering another question, and NOT a question itself, you don’t really make any sense. The studios, and some people on here, are alleging that redbox is devaluing DVDs and, even more ridiculous, ruining the entire movie industry, acting as if what redbox is doing will shut down hollywood and we will never see another movie again. My opinion about the matter does not change.
And to take a page out of your book: Consumer, you just answered your own comment. What the studios are doing is based solely on greed and wanting a bigger piece of the pie. The studios are only trying to get more money from redbox. If they want to raise the perceived value on their product, they would charge more from their end, to everybody: meaning, they would charge the wholesalers more for the DVDs, then they in turn would have to charge more to companies like redbox. Instead they threaten the wholesalers that if they sell their product to redbox they will no longer be supplied with said product. If it were simply a matter of studios raising the price of their DVDs to everyone you would have a good point. But since it isn’t, you don’t.
Your right about the studios being greedy. They are. Why shouldn’t they try to get more money from Redbox. That is what businesses do. Make money. The studios are responsible to their shareholders and no one else.
But, we are all greedy. If we were not greedy, there would be no such thing as Redbox. The reason everyone uses Redbox is to save money. Blockbuster is nice if you don’t want to worry about late fees but still like the physical disc. Netflix is good if you are not impulsive and the streaming option works for you. Redbox is the best right now for price, convenience and impulse. That’s why there are 22,000 Redbox machines. We all want to save money. Is that greed?
The fall of every great empire (or industry in this case) has been greed and pride!!! If Redbox has designed a business model where they can be profitable and offer convenience and affordability to their customers at the same cost their competition pays, then why should they be penalized? This is America; built on ideas and capitalism.
The problem, as has been repeated over and over again to the ignorant on this site, is that Redbox does NOT have a business model that works unless they can reduce their cost of goods to about half of what Blockbuster pays.
They had that deal in place and it may actually destroy two of the largest wholesalers in America (or at least cost them $40-50 million in losses minimum).
The studios have every right to demand that the wholesalers they sell to act responsibly. When they see two of the their largest customers heading rapidly towards bankruptcy because of bad deals they made with Redbox, they have every right to demand changes. Otherwise they would end up will Hundreds of Millions in losses when the bankruptcy occurs.
John “SMALL” (hope that isn’t in reference to the capacity of your brain). If Redbox pays the same amount for movies that Blockbuster & Netflix does, who gives the right to studios to try and dictate what they can rent/sale them for? Please research the “first sale doctrine” and all of it’s bylaws before commenting. That’s the whole basis of this lawsuit, is that the studios threatened the wholesalers with discontinuing to sell to them (exclusively Redbox) unless Redbox agreed to their terms. Why do you think you’re able to choose a different default browser on a Microsoft OS, because of an anti-trust guidelines. Believe me, this isn’t a road studios want to go down and lose. You’re a socialist and don’t believe in competition and capitalism. Assimilation or annihilation is the choice for these studios.
The problem is red box doesn’t pay the same as Blockbuster & Netflix they had buy backs written into their distribution deals. So basically your whole arguement here is moot and that’s the root of the problem.
Ingram and VPD were buying DVD’s back and in the beginning we’re trying to resell them in the $5 to $7 range only to see their used inventory continue to grow. Now, most are being offered for sale to their accounts for $1 to $3.
Redbox on average was only investing, after the buyback from the wholesalers, approximately $7.00 per copy.
Thank for the ad hominem attack (look it up if you need to, otherwise you know what you were doing).
As I said and Joey continued to point out, Redbox has a business model that only works if the pay HALF the cost of Netflix or Blockbuster for their product.
Not the same price, HALF the price.
Do you think it is fair for one company to demand product for half the price? If every video rental company could buy their new product at $7.00 a piece, you would see a ton of store renting at lower prices. However that is not reality.
Please do some research before you attack poster who are telling the facts about the situation. You may want cheap rentals but the end result is that there will be no movies to watch. Great trade off.
Well said dillyclm! I am in total agreement here.
In agreement with what? That the studios should have to change their entire pricing structure because a company like Redbox cannot make money unless they do.
There are plenty of businesses making a profit renting DVDs at ther price studios want to charge. Why should they have to drop their price in half because a poorly run company like Redbox can’t make a profit unless they do.
Redbox is the one that needs to learn how to adapt to the market. Either that or they will die out.
Okay Frick (Joey) and Frack (John small) this has nothing to do with the litigation going on with the studios. The unsubstantiated facts you spew are between VPD, Ingram and Redbox. Has nothing to do with the lawsuit going on with the studios. If VPD and Ingram are so sour about their agreements, them renegotiate it. But nowhere do you see the distributors complaining about their rental agreement w/ Redbox. You guys are comparing apples to oranges.