What is this – some studios are coming to their senses? For the second time in 24 hours, Redbox has been praised by a studio exec. Who was it this time?
The answer: Jeffrey Katzenberg of Dreamworks Animation.
“For us, they’re great – bring them on,” said Katzenberg, Dreamworks Founder and CEO.
Katzenberg is one of Hollywood’s biggest names – and a modern studio success story. The 15 year-old studio was started by Katzenberg, Steven Spielberg and David Geffen back in 1994. Since its inception it has seen major successes with nearly every film it has released. You may recognize some of them: Antz (1998), The Prince of Egypt (1998), Shrek (2001), its sequels Shrek 2 (2004) and Shrek the Third (2007); Shark Tale (2004), Madagascar (2005), Over the Hedge (2006), Flushed Away (2006), Bee Movie (2007), Kung Fu Panda (2008), and, most recently, Monsters vs Aliens (2009).
When the leader of such a successful studio speaks up for Redbox, maybe things aren’t quite as bad as some other studios are making them seem. Either that, or the other studios just put out crap movies and can’t stand on there own without being propped up by overpriced rentals and DVD sales.
For DreamWorks, Mr. Katzenberg said Redbox displays a “sharply higher conversion rate from rental to purchase” than other rental companies (Blockbuster, Netflix). In other words, Redbox is actually serving as a sales agent for the studio’s animated titles: People are renting films like “Madagascar: Escape 2 Africa” for $1 and deciding they want to own them.
What, a higher conversion rate than Blockbuster? My, oh my, that is some pretty strong support right there.
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So, instead of fighting Redbox, maybe it is time for the other studios to start putting out better movies. A novel idea, I know.
What do you think: Can this positive press from a such a successful studio give Redbox just the boost they need to make it through all of this?
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Can other studios actually make good films? Let us know in the comments.
[via nytblogs]
“People are renting films like “Madagascar: Escape 2 Africa” for $1 and deciding they want to own them.”
You mean if you make a good movie people might want to buy them?
What a novel concept!
Universal should take note, just make good movies we like and you can continue to drive that nice car and live in that nice house up on the hill. It’s pretty simple.
The same thing is hitting the movie industry as hit the music industry… it used to be that to sample the product you had to buy it at full price and tough luck if it was junk. No longer true, and an industry built upon the inflated profits this enabled is feeling reality.
I think that’s exactly what I’ve been saying (and, well, writing a short essay on) all along. Studios are simply doing nothing more than shooting themselves in the foot when they fight Redbox for renting DVDs out at a price that works for the market. I’m really glad that at least one studio (two, now?) came to their senses…
Now if only the *remaining* studios/distributors come to their senses…
Where are the “FoxWins” and “Joey”-naysayers now?
Those guys have their points and their views and valid reasons why they feel the way they feel. The problem is, like the studios, they are obviously invested somehow in the “old way” and adjusting to a new landscape might be too much to ask of them or the studios. It’s easy to say you just have to change with the new landscape but not everyone has the financial or emotional depth to do it….so the answer is to just go down fighting. It’s not ideal but it is very common.
Hearing this view from Katzenberg, someone considered to be a progressive thinker (like Steve Jobs or Mark Cuban), should at least let naysayers like FoxWins and Joey know that there are successful people currently invested into this industry that see redbox and realize there IS a way to MAKE money with them. It’s good business.
There’s one more thing to keep in mind. When adults buy movies for themselves , they may only watch it 3 times before it gathers dust. When they purchase family movies, their kids may watch it 100 times, thus the impression of getting more for your money. Dreamworks movies make excellent babysitters.
..You are right tobychili.
I just recently left the industry and one thing I can tell you is that dvd sales were already starting to decline well before redbox got big. The studios answer to that was BLU RAY. They really thought all those people out there who had huge collections were going to REBUY them on BLU RAY or at least continue the collection with BLU RAY and just rebuy a few faves…
BLURAY never took off due to studio mistakes and the economic downturn. redbox is just the easy excuse for them…TRUST ME ON THIS. So you said the magic word…gathers dust. People started to realize how many DVDs they bought and never even opened! It was a nice ride while it lasted but now its all about rental again and now that the studios spent so much time ignoring rental they have no solution to compete in redbox’s new world. It’s just POOR POOR planning on their part but those same execs who screwed up will blame redbox to save their jobs instead of being seen as someone who made a mistake in their job.
I find it interesting that they’re able to detect the conversion rate from RedBox, as I am likely to test a movie for $1 and then go buy the retail copy from an online retailer if the movie is worthy.
I hesitate to pay high Blockbuster rental prices to test a movie, since then I’ll feel like I paid WAY over retail if I buy the DVD. So, Blockbuster is a deterrent to full retail sales for me, whereas RedBox is an encouragement.
Of course, both fail when the movie sux, but that’s another story.
Wow two whole people who distribute through paramount have made positive comments about redbox. They are so confident in them they built in the contract an out after 4 months. Also the paramount comment did mention that the pricing should be increased. So that kind of negates that comment as a positive. Once again Devaluing the industry, Devaluing the industry, devaluing the Industry everybody knows it everybody sees it.
While I love Rebox, I’m actually surprised they didn’t have a revenue sharing agreement from the get go. I mean, all dvd’s at the very beginning of the video all say you can’t be doing what they are doing. I mean, couldn’t they set up that they like give back 5% of all rentals or something? I’m sure there is a # they can afford. I don’t see how what redbox is doing is any different from software/movie pirates, which we all know is wrong. Though in that I think it’s the software/movie makers fault such exists because they won’t offer their titles at a more affordable rate in the country’s that they must. After all, if the pirates can do it, why can’t they???
Sadly, it’s likely going to be us consumers that loose in this. I hope Redbox wins this fight, after all, it makes seeing movies affordable for me, but I think they should also do the right thing and share the earnings, because it is after all not their intellectual property.
Understand, I share warez, so I’m all for free sharing both morally and intellectually, because after all 99% of those who use wares would never by 99% of the warez they use because they couldn’t afford it anyway, so it’s a lie that the developers are loosing money, but Redbox is a commercial enterprise, they should be giving something to those who’s work such belongs too because Redbox is profiting from it.
What they should start doing is find a percent that they can afford to give back, and just start sending the money to those who own the movie rights. Then they are protected, and they can show that they are acting in good faith, and they and us will definitely win in the end. I worry though that Redbox greed will ruin it for everyone. Anyway…. :)
“all dvd’s at the very beginning of the video all say you can’t be doing what they are doing”
They say you can’t copy the DVD or sell tickets to view it. They do NOT say you can’t purchase a DVD and then rent that copy. Rental is 100% legal (google “first sale doctrine” if you don’t believe me).
“couldn’t they set up that they like give back 5% of all rentals or something? ”
Apparently the standard revenue sharing percentage when there is an agreement is more like 70%, not 5%. Which is why Redbox has tried to avoid it.
“they should be giving something to those who’s work such belongs too because Redbox is profiting from it.”
They do, every time they buy a DVD to rent out.
From the WSJ
Redbox Threat
Owned by Coinstar Inc. (CSTR), Redbox kiosks charge $1 a day for movie rentals at supermarkets, drugstores and other retail outlets with significant foot traffic. The company has 15,000 of the kiosks in place and plans to have 20,000 in operation by the end of 2009.
According to Nathanson, Redbox presents “the most extreme risk” to the studio business model. Bernstein estimates that Redbox generates about 15 rental transactions, or turns per disk, compared with nine to 10 turns for Netflix and 6.5 turns for Blockbuster Inc (BBI).
“It is impossible to measure the potential loss of sell-through from each Redbox rental,” he wrote. “But, by any simple math, Redbox is the worst cannibalization outcome of the three rental options given its higher turns per disc.”
This has spurred the studios to go after Redbox. So far, Time Warner Inc.’s (TWX) Warner Bros., News Corp.’s (NWSA) Twentieth Century Fox and General Electric Co.’s (GE) NBC Universal have gone on record as demanding that Redbox wait about 30 days after a DVD is released to the public before offering it for rental. (News Corp. also owns Dow Jones, publisher of this newswire.)
Redbox in turn has filed suit against the studios, claiming that their ultimatum amounts to restraint of trade. If the studios can’t force Redbox to wait 30 to 45 days after a DVD hits the streets to offer it for rental, perhaps, says Nathanson, they can at least get the company to raise its price for rentals.
During an investor presentation last week, Time Warner Chairman and CEO Jeff Bewkes said that while there may be a place for low-cost DVD rentals, “It can’t be while we’re trying to offer higher-cost rentals or trying to sell a copy.”
Warner Bros. is also trying to renegotiate revenue-sharing terms with online DVD rental pioneer Netflix, a further indication that the studios feel that now is the time to make a stand and protect their DVD revenues.
Joey, you seem to contradict/sabatoge the point against Redbox that you’re desperately trying to make here. What you’re basically applauding in your example is that Time Warner Ceo Jeff Bewkes (and other studio heads like him) are saying that though there may be a place for consumer-friendly/consumer-driven rental businesses like $1- rental Redbox , that “place” needs to be second to the mighty greed of the studio kings/directors/producers/script writers and actors/actressess, etc. that continue to get paid $20 million+ for inferior work.
From the same WSJ article…
Studio Obstacles
Several factors are working against the studios in the DVD market.
The main problem, says Hal Vogel, veteran media analyst and president of Vogel Capital Management, is that they are trying to hold back inevitable change.
“They don’t want to follow the music business, but in a way they’re making the same mistake the music companies made – they’re fighting the convenience,” Vogel said. “You’re in a supermarket at least once a week, you rent a movie for $1, and you give it back the next day or two days from now. No hassle, no strain. You can get most of the movies you want to see. And [the studios are] trying to make it harder for the consumer.
“They want to hold on to the legacy business. And ultimately that’s not going to work out,” Vogel said.
Another difficulty is that retailers appear to have lost faith in the DVD product.
Large chains like Best Buy Co. (BBY) and Borders Group Inc. (BGP), decimated by steep declines in DVD sales, are allocating less of their physical space to the discs.
At Borders Group, stores in the second quarter that had been open at least a year saw DVD sales plunge 48% compared with the same period in 2008, the company disclosed in an earnings call with analysts last month. Music CDs were also down dramatically, continuing a long trend, and Borders Chief Financial Officer Mark Bierley proudly told analysts last month that both categories will be a less important part of the company’s business in the years ahead.
“The good news is that we’ve made the right strategic moves in this category…and multimedia now represents just 8% of our sales compared to 2002 when the category was at its peak of over 23% of sales,” Bierley said during a conference call.
Funny how Joey didn’t mention the “other side” of the story. See he only sees things in his lopsided, one sided point of view. That’s totally typical of him. So Joey in the future if you’re not going to post the “whole” story maybe you shouldn’t bother to post anything! Oh that’s right, but then you couldn’t get your “bogus” point of view across now could you?
what bogus point is that?
The only point I’ve made is that red box is devaluing the industry. It’s obviously not just my point because it seems like a majority of this industry is saying this same thing. You maybe havn’t noticed because the only vested interest you have in any of this is you get free codes and $1 movie rentals. Not once have you ever said that possibly there is something to what is being said. I will acknowledge your point that $1 rentals are nice and the convience of the kiosk is also great for consumers. But there is a flip side to this and there is also an affect that all this is causing on an entire industry. Right,wrong or indifferent I…. (I mean me)… think that redbox is just a bad thing in the long run for everyone including consumers. I guess time will tell what happens to this industry and to redbox I just don’t think as it is it’s all candy drops and sunshine like you seem to portray everything
I’m not trying to say it’s all peachy, I’m just saying if you’re going to quote an article, quote the WHOLE article not just the part that you think makes your point. Be fair about it, that’s all I’m saying. When you post articles you like to deceive people about what’s going on by not giving them the whole story and that’s not right. Let them have the whole story so they can form an opinion for themselves instead of the one you want them to believe. And I’ll say it again, Hollywood has been far too greedy for far too long and they are only crying now because they’re not getting their part of the pie that they think they should get. They have overcharged (raped) the public for far too long and it’s about time they quit getting by with it.
So your honestly saying that a movie rental, A night of entertainment is honestly only worth $1.00? That’s the same price as a bottle of pop. Have you seen what happened to the newspaper industry? That is what redbox is doing to this industry.
Yes I am HONESTLY saying that a night of entertainment is only worth a dollar. Haven’t you been listening? And again, if you break down the price for rentals from Blockbuster and Hollywood Video they are even less than a dollar a night, they just MAKE you keep them longer than one night (or charge you for more than one night even though it doesn’t take the average person more than one or two nights to watch a movie). And you’re still comparing apples to oranges, what the hell does the newspaper industry have to do with movie rentals? Seriously, here you go with TOTALLY UNRELATED things again, I mean how can you possibly compare the newspaper industry problem with Redbox? People decided to get their news from the internet instead of a newspaper…..and the connection is…..? Besides that now the newspapers have skyrocketed in price which only makes the problem worse for the newspaper industry, because if people didn’t want to pay 50 cents for a paper what in god’s name makes them think they’ll pay a dollar or more for it! Yeah that makes sense, since no one is buying our product let’s raise the price of it…BRILLIANT!
The comparison is people started getting them cheaper or free from the internet and the likes and now newspaper after newspaper have gone away. If I have to draw a picture for you red box is giving away the product free with codes or not charging enough(devaluing packaged media) and now studios, Brick and morter, retail and sell thru in general are going to eventually go away if this doesn’t change or they will be forced like newspapers to raise their rates to recover the lost revenue due to red box. Your point about blockbuster is so invalid. Yes if you break down the per day pricing it would be less then a dollar but the thing is you can’t break it down because they don’t do $1 a day rentals each person and every person is paying more then $1.00.
And your statement “They have overcharged (raped) the public for far too long and it’s about time they quit getting by with it.” A DVD ONLY COST AT MOST $20.00 if that’s to expensive for you I’d find another job instead of sitting here on this site all day defending Redbox Oh that’s right you have a vested intrest in them.
Redbox killed the Newspaper too! Wow they are the new evil empire.
I have to admit the pricing does seem a bit cheep. I don’t understand why redbox just doesn’t charge $2.00 a night everybody wins.