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Paramount Loves Being in the Red

Philippe Dauman, CEO of Paramount’s parent company Viacom, has had some nice things to say about the recent trial deal Paramount struck with Redbox.

IR---Paramount-GraphicDisplaying an attitude that contrasts sharply with that of certain other studio heads, Dauman stated that the Redbox deal has had a twofold benefit for Paramount: it has added rental revenue to the company’s coffers and has provided valuable marketing data from specific markets. Dauman’s praise came during the Goldman Sachs Communacopia XVIII Conference in New York City.

“Redbox has obviously resonated with customers,” said Dauman, who estimated that a typical Redbox customer spends $2.50 on a rental because of multi-day rentals.
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“We felt that rather than litigate this, let’s test this, especially if Redbox proceeds with differentiated pricing for certain releases.
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The fourth quarter of this year will be an interesting test of the Paramount/Redbox alliance.  Paramount’s Transformers: Revenge of the Fallen and Star Trek, two of the highest grossing films of the year, are coming out on DVD in October and November, respectively. While these huge films most likely would have done well regardless, you can be sure Paramount will be watching the rental numbers very closely looking for an extra boost from their less restrictive distribution. Your thoughts, Insiders?

[via videobusiness]

9 Responses to “Paramount Loves Being in the Red”

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

    especially if Redbox proceeds with differentiated pricing for certain releases!

    I think this statement says what paramount will be asking for come December

    • Administrator
      Michael [administrator]

      I agree. I caught that one, too.

      Personally, I don’t think it would be a big deal for Redbox to charge $1.50 for the first night of the new release within the first 7-14 days of release, particularly on hit movies. The problem is that it could easily cause consumer confusion, although I guess they could stick a “badge” over each release this affects.

      We’ll see what happens – and we will keep you informed!

    • Visitor [Join Now]
      Davis Freeberg [visitor]

      It’s worth noting that Bewkes at Time Warner said that he’s been negotiating with the “kiosk” companies for differentiated prices on new releases so Paramount’s not the only one asking for this. I bet the Time Warner lawsuit goes away if they increase the price of new releases to $2. This would better protect the VOD window from Redbox pricing, would make Redbox more money and open up more long term deals for them, but would be terrible for consumers. Not only would we not get the defense of the 1st sale doctrine that Redbox is providing today, but we’d end up having to pay more for DVDs just because the studios don’t want to have rentals at a dollar. If Redbox did raise prices, it would take me about ten seconds to find a DVDPlay machine instead.

      • Administrator
        Michael [administrator]

        You can bet if Redbox raises prices DVDPlay will do the same. Remember, the studios only hate Redbox because they are the largest. The restrictions they are looking for are across the board on all kiosks – and even Netflix, in the case of Warner.

        Everything hinges on how things turn out with Universal, but that could still take awhile. But, even a win in the short-term for Redbox, could be a loss in the long-term. When it comes to the future, Redbox knows they need to be friendly with the studios, or else how could they start their own streaming/on-demand service?

        Interesting times are ahead…

  2. Visitor [Join Now]
    Jim [visitor]

    I will be getting both movies from Redbox. Hopefully their numbers will be high so the movies heads will see the benefit Redbox provides and the revenue they can make from an agreement.

  3. Member [Join Now]
    Bikemiles [bikemiles]

    Instead of the confusing higher new release there could be some promotion/screen banner of Paramount as a “Redbox partner”. This could tie in with Redbox stocking a number of Paramount DVD’s that aren’t current. A lot of people, including myself didn’t rent movies before Redbox so there is a pent up demand there. The DVD trailers could be customized for Redbox if Redbox pre-orders with adequate lead time..

    Everyone makes money when you increase product demand. I don’t know the studio but I just reserved “Benjie” at Redbox. Old but I haven’t seem it.

  4. Visitor [Join Now]
    Teenie [visitor]

    I will not rent a new release for more than $1. I only use Redbox b/c the movies are a dollar. Before Redbox I would wait until the new release was place in the $1 rentals before I would rent it at my local video store.

    If Redbox started out with differentiated pricing for certain releases I would have been ok with it. Now, I want my $1 movie. The movie industry is just being greedy.

  5. Member [Join Now]

    Differentiated pricing will not work. The only reason we rent these movies from Redbox is they are only 1 dollar. These movie industry needs to understand they are getting extra revenue by making agreements with Redbox. We go to the movie theater sometimes. Expand Redbox and automated movie rentals for a dollar and everyone wins. Movie industry gets greedy and tries to shutdown Redbox or limit releases to Redbox then the Movie industry will lose!