Redbox issued an official response to Fox’s demands that Redbox either pay them more money or not be allowed to purchase and rent their DVDs until 30 days after release. Check it out…
Despite 20th Century Fox’s effort to delay consumer access to new release DVDs by 30 days at rental kiosks, redbox reaffirms its commitment to providing consumers new release DVDs.
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Redbox will protect consumers’ rights to access new release DVDs at their preferred retail channel at the price the consumer deems reasonable. Redbox will continue to carry all major new releases, including 20th Century Fox titles, at the more than 17,000 redbox locations nationwide.
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The first priority at redbox is the customer.
Like I said in my last post about this, the simple translation is: “Screw you, Fox. Our customers come first. Eat my shorts, man!”
Let us know what you think – leave your response in the comments. (Oh, and you get bonus points for knowing where the reference in the title came from and why it’s so appropriate here.)
Redbox has lots of false bravado. Redbox will have to pay up, and its business model is in jeopardy.
There’s a domino effect here. First it was Universal. Now it’s Fox. Next it will be Warner Brothers. And as each studio partner walks away the pressure on Redbox increases. The remaining studios will have Redbox over a barrel, will be able to dictate contract terms and force Redbox into lopsided deals.
In the near future, Redbox will have to determine what’s more important to the consumer. A low price point ($1) or day and date availability? Right now Redbox offers both. But Redbox will soon have to make a choice, because it will not be able to offer both.
If more studios continue to jump on this bandwagon, eventually it will come to litigation, and with the MPAA already looking like a big meanie to a lot of people, I doubt any movie studio wants to risk being the one that sues Redbox. Besides, I doubt the studios have even a tiny chance of winning that lawsuit anyway.
I think probably the reason that Redbox is essentially giving the studios the finger is that Redbox is not doing anything illegal with the DVDs they purchase, but cutting off their supply of those DVDs may very well be illegal. If there is a delay between “buy it today” and “rent it next month” for EVERYBODY (Blockbuster, Hollywood Video, Joe’s Video Rentals in the grocery store, etc.), it might possibly fly, but refusing to sell DVDs to Redbox just because you don’t like what they charge for the rentals is like Wal-Mart refusing to sell Jif to a specific guy because they don’t like that he eats it on celery. It’s not right. It’s not the way we do things in this country. :)
On top of that, Redbox has a kind of Robin Hood image, like they’re looking out for the “little guy” (the consumer’s image of himself). Any studio who stomps Redbox is going to look like Goliath attacking David. I don’t know if people are savvy enough to the business to connect a studio to its own product and refuse to patronize that studio, but certainly that kind of activity couldn’t do anything but get ire sent the way of the studio.
And who doesn’t know the yellow guy who has made so much money for the Fox TV Network… the guy who says “Eat my shorts?” :)
Whether or not it’s “how we do things in this country”, it’s might well be legal.
Redbox has sued Universal over the practice to try to get it declared illegal. But if it were a slam-dunk issue which Redbox will surely win, Redbox would have sought an injunction to make Universal sell to them until the court case was finalized.
Redbox is basically rolling the dice with thair lawsuit, they already agreed to a compromise with Sony which increases Redbox’s cost.
For big hits buying Universal and Fox titles at retail is still profitable. It’s the marginal ones which will suffer, they will never show up in a Redbox because they aren’t guaranteed to sell enough to repay the higher DVD cost.
It might be marginally profitable. When Redbox is forced to purchase at retail, it’s a logistical nightmare, its costs are higher, and the DVDs will be available elsewhere before they’re available at Redbox.
And as more studios walk away the pressure on Redbox increases. It’s one thing to endure a logistical nightmare with Universal, which only accounts for 11% of the market. But throw in Fox, now you’re looking at 25% of the market. And if Warner Brothers joins in, then you’re looking at 50% of the market.
If Redbox has to go to retail for 50% of the popular titles, then its business will be crippled.
It looks like Redbox will have to choose between offering $1 rentals and offering day 1 availability. It won’t be able to offer both.
There is always creative ways to increase prices, without consumers feeling it. (A) Increase sales volume,ex: Rent (3) & get a “new release” for $1. (B) Rent two “New Release” movies @ $1.50-$1.75 each-get a regular movie for xx% off.
New Release Movies are like box seats at the game, you have to pay more for Prime anything. I would pay more to see a New Release. People want to keep you around ! A non-profit organization is not an option. Get creative.
Nobody is refusing to sell to Redbox. Redbox is free to purchase its DVDs at retail outlets like Best Buy, and this is exactly what Redbox is doing with regard to Universal and now Fox titles.
What Fox and Universal are refusing to do is offer substantial wholesale discounts to Redbox unless it complies with certain terms. Nothing illegal about this. For example, Redbox recently agreed to destroy product, etc, in exchange for its deal with Sony.
There’s a place in the market for Redbox, just like there’s a place for discount movie theaters. You can pay Edwards Cinema $10 to see GI Joe on the first day, or you can pay Joe’s theater $2 to see GI Joe on the 30th day.
Similarly, if Redbox wants to devalue product for $1, then it will likely be forced into a separate “window” which will become available 30 or so days after street date.
>What Fox and Universal are refusing to do is offer
> substantial wholesale discounts to Redbox
> unless it complies with certain terms. Nothing illegal about this.
Not true. The studios don’t generally sell directly – they sell the rights to distributors who take care of the burning, packaging, shipping, etc. and then sell the product to the retailers and rental companies. What’s changed is that Universal (and now Fox) are telling the distributors (and the larger retailers I think) that if they sell to Redbox or to anyone who has agreed to supply Redbox in quantity, they will no longer be able to buy Universal (and now Fox) titles.
First-sale doctrine violation? It’s for the courts to decide, but this isn’t as simple as “they don’t want to sell to them anymore, and that’s their right.” I’m the last person to play the “corporations are evil” card — I believe in free market economy… and all the businesses involved should be free to make a profit. The problem is, that the studios don’t really believe in the free market, not when it doesn’t suit them. Universal and Fox are trying to sell their product to the distributors and then still control what happens to it afterward. Once sold, that product should be free to move through the economy. If a precedent to the contrary is allowed to be established, it’ll be bad for business all around, not just for DVD rentals.
You guys defending the studios right to dispense with their property as they see fit need to understand that you are actually arguing against that right by defending them. Once they’ve sold it, it’s not the studio’s property anymore, but they still want to control the secondary market so that they can keep the price high. Buyer’s rights to property should be the same as the sellers and that’s what first-sale doctrine is all about, not about limiting them.
>Universal and Fox are trying to sell their product to the distributors and >then still control what happens to it afterward. Once sold, that product >should be free to move through the economy. If a precedent to the >contrary is allowed to be established, it’ll be bad for business all around, > not just for DVD rentals.
Selling a product and still maintaining some control is commonplace.
See the Redbox-Sony agreement. Sony sells dvds to Redbox, but Sony is preventing Redbox from reselling the dvds and is in fact requiring Redbox to destroy the dvds after a period of time.
Also, If a consumer purchases a dvd at retail he is still limited in what he can do. For example, he cannot setup a public viewing and charge admission.
Even outside the world of dvds, if I purchase an iPhone Apple still controls which applications I can install. Apple recently banned the Google Voice app on the iPhone.
Examples abound. What Universal and Fox are doing–preventing Redbox from accessing wholesale discounts but allowing Redbox to purchase at retail just like everyone else–is perfectly legal, and it’s common that companies will sell a product yet maintain some control over how the product is used.
Those examples are all specious:
Redbox and Sony reached an *agreement* – had it not been mutually beneficial, Redbox could still buy movies, like before. In essence, Redbox got a better deal directly from Sony, so they took it. At any time they could still buy from the distributors (and lose their copy-depth deal). What they cannot do is sell the copies they received as part of the agreement (because they didn’t buy them, they licensed the content and essentially borrowed the disks).
You are not allowed to broadcast a movie because of copyright limitations on the *movie*… not the DVD itself (you own the medium, you can do what you like with it – including sell it to others).
True the iPhone comes locked, and you void the warranty if you jailbreak it, but you are still legally allowed to do so (in the US… in other countries it varies).
You need to do some homework instead of making this up as you go – it is *not* common that you can sell something and maintain control… it is common for companies to try. Preventing wholesale purchase would be one thing if the studios were the ones selling it (I agree that could be fine, though even then there’s laws to govern it – you can’t for example refuse to sell to someone due to their ethnicity, or other arbitrary reasons), but the studios are not the wholesalers and Redbox doesn’t buy their movies from the studios. They buy in a secondary market (i.e. from 3rd party distributors).
>Redbox and Sony reached an *agreement*
Yeah, and apparently so did Fox and Universal, with their respective distributors. The agreement goes something like this. We’ll provide you with rights to title X as long as you don’t sell to the kiosk channel (Redbox and others) in the first 30 or so days.
If it’s okay for Sony to prevent Redbox from reselling titles as part of their “mutually beneficial” agreement, then it should be okay for Fox to prevent VPD and its other distributors from selling into the kiosk channel for a limited period of time, as part of their own “mutually beneficial” agreements.
I don’t see a meaningful difference between what Sony is requiring from Redbox and what Fox is requiring from its distributors.
“Like I said in my last post about this, the simple translation is: “Screw you, Fox. Our customers come first. Eat my shorts, man!”
I love Simpson phrases “Eat my shorts, man!”
“Eat my shorts, man!” is of course a Simpson’s quote from Bart. Simpsons is a Fox show. I believe the longest running of any Fox show in history. Many would argue that the Simpsons launched Fox as a major brand and allowed for further successus all the way up to it’s popularity today with such hit shows as American Idol. Without the Simpsons Fox would still be considered among the ranks of the WB.
The NFL is what made Fox widely available, not the Simpsons. I believe the number of Fox stations doubled right after the NFL got a billion dollars, which was about 30% more than what the other networks had to pay. But, I don’t think that really furthers your argument.
The Simpsons may have helped increase ratings on Fox’s TV network, but 20th Century Fox was around before TVs. They formed with the merger of Fox Film Corporation (founded 1915) and Twentieth Century Pictures (founded 1932) in 1935. They’ve got a huge back catalog of popular and important films, though personally I think many of their current releases are rather weak so I don’t think I’d mind a 30 day delay. I think it is a load of crap though and I hope Redbox wins the battle.
Fox films: http://www.imdb.com/company/co0000756/
Regarding their TV station, I think I’d rank them back down among the WB the last couple years, I used to like the network a lot better, but since the start of reality programming, they’ve cancelled too many good shows to replace it with crap, usually cheap to produce reality shows. Usually the shows get cancelled before they even get a chance to build a following. For me their hayday was back when the Simpsons, Married with Children and the first few seasons of In Living Color were on. The other major networks aren’t much better though, I’ve been finding better shows on cable channels.
Redbox is the champion of the common man mainly because that’s how Redbox makes its money. Let’s not fool ourselves here.
If Redbox agrees to a 30 day window, their sales will drop precipitously. They depend on new releases being rented out almost completely to pay back the DVD cost, that’s why they are willing to pay more to get certain popular Universal and Fox releases at retail.
But if Redbox is forced into charging more money for rentals they will lose their customers. If Redbox charges more I might as well just go to Blockbuster.
I wouldn’t mind paying a couple of bucks to Redbox to see a new release as it costs me $5.50 to rent one from Blockbuster. You must be pretty flush to pay those prices!
I agree the customer should come first. The comment came from the Simpsons and it is a fox program!!
i bet fox is doing this because they know Redbox will pay retail dont you get it??? They are making more money this way because redbox wont give up on their customers! If they are will to buy retail at the moment the Fox and Universal will continue to deny Redbox. Its a tough two way street Redbox wants to take care of their customers so they do the purchasing but the best way to stick it to these studios is NOT purchasing the movies. These studios know what they are doing who are they kidding.
Fox and Universal won’t make more money if Redbox buys DVDs retail, the retail stores will make the extra money. They were getting the DVDs from the same distributors the retail stores have to use, so all buying retail does is add another middleman in and increase costs for Redbox.
This ploy by Fox if it works has the likelihood of costing them money because if Redbox has to wait for 30 days to pass, the odds are they are going to purchase a lot fewer copies, thus reducing the fees the distributors end up paying out. I don’t foresee too many Redbox users spending more to buy the DVD if Redbox doesn’t have it on release. If they can’t find it to rent for $1, they will probably find another way to watch it for less than the cost of purchasing or skip it if unwilling to wait a month. If they want to boost profits, maybe they should make better films and give the overpaid execs and stars a pay cut.
I still can’t comprehend why studios are actually FOLLOWING SUIT in shooting themselves in the foot. Hey, Universal shot themselves in the foot… so why don’t we? Let’s make it so we can’t make any money off DVDs anymore. Let’s try to dictate strict terms to the one company now keeping DVD sales afloat.
Really, what Redbox is telling these studios is “Um, look kid, we’re doing you a favor here… so even though you’ll probably end up kicking me in the face with your flailing arms and legs in a temper tantrum, I’m TAKING… YOU… TO THE NEXT CENTURY… WHETHER YOU LIKE IT OR NOT!!”.
There is nothing detrimental to the studios’ business model in any way, being done by Redbox. And I can’t see how the hell the studios would have any problem at all with it. If anything, I’m shocked that they’re so dumb enough to not be thanking Redbox for keeping DVD rental alive against online streaming like Netflix…
Oof. Good god, I think the senile old executives in the movie/recording industries just need to be forced to retire. For their own good.
I will keep renting from RedBox as long as it costs $1 – 30 days after release or not. And if the movie studios make matters worse, I might just consider “renting” their films for free before they are even released in theaters, if you see what I mean.
Well, I probably won’t, I just don’t “have to” watch movies immediately – a good movie is a good movie, the next day or year.
I have no idea how to send an email to the site owner, but I thought this was interesting.
When I went to RedBox early this morning to see if any new movies were posted, I saw this:
http://yfrog.com/0mredboxmj
its a hosted image on imageshack, so don’t be too afraid. But, LittleBigPlanet is in the available movies list. Along with GI Joe. Clicking on either of them does nothing though.
Yes, these titles started showing up over the weekend, and were just removed from the Redbox site yesterday. To see what is going on, read my “The Future of Redbox: Part 2” post.
Thanks for sending this in.
Of course, you are referencing one of my favorite characters, Bart Simpson. The Simpson’s made FOX, without them, there would be no FOX. I love Matt Groenig, but unfortunately his success created a monster. Thanks for standing up to the Mr. Burns’ of the world.
Dear Studio heads,
If I haven’t gone to see any of your movies in the theater. What makes you think I’m going to run out and rent that same movie when it’s first released. It sure don’t bother me to wait a month or 8 to rent it.
Your average renter.
CF
Fox has a few redeeming, very fortunate airspots…The Simpsons…brilliance in animation, writing, humor, etc…far from this network’s relatively conservative stance on most things,,,and…a decent baseball game now and again…sadly hosted by repetitive hosts who love to hear themselves talk…
It was interesting, I must say, to listen to all the business majors before me ramble on about the logistics of all of this..very impressive..and..YAWN…
As a consumer, like the rest of us, I really don’t much care about the demands that any Network puts on anything..Yeah, I know, it may sound simplistic and the rest of you are surely welcome to hem and haw at these comments….but….in the long run, it’s nothing more than the price of a movie spitting out of a red machine located in some other corporate dispensary..
We got 2 words for Fox and Universal…SUCK IT!!!
Haha, yea the Bart Simpson reference was great and so appropriate!!
The Studios are all crying wolf because of failing sales. It hits them in all areas not just DVD rentals.
They are just trying to pull a fast one just like Microsoft. Pretty soon you will be getting movies you will have to return to the studio due to copyright protection. HA HA
Studios make money if the timing of the movie is right and they lose if they miss the window….. Customers go to movies if they can afford it, Buy DVDs if they can afford it, and rent the same way.
I believe the studios should give you a DVD of the movie when you buy a ticket.
The price is getting pretty much the same. Have you gone to the movie lately and bought a bag of popcorn and soda to watch. You could easily spend $30.00
Nuff said.
Bart Simpson is the “eat my shorts” guy. I will still use Redbox. what I want to know, Michael, if I take advantage of the blockbuster offer will the one year membership be added to my current membership?
I really enjoy reading your blog.
I am not sure what Blockbuster offer you are referring to. Do you mean through TrialPay? If so, I believe that the year starts today, and is not added onto the current time left on your membership. You can go ahead and do it, though, and I can manually adjust it if needed.
Has anyone else seen the blockbuster express kiosks (in our local publix) renting discs for $1.00/day also? I have not personally rented from this kiosk yet but there are freebie “codes” available.
I’ve heard of them but there are very few as of now and none in my area.
The most powerful tool you have is listing on the rental page what company the movie is from, The customer will determine the rest by choosing to not rent that companies videos. 30 days after release I have forgotten about that video and am looking at the current new releases.