The news has finally come – Redbox and Warner Bros are making up and consumers will pay the price. Get ready to wait 28 days if you want to get the latest Warner releases from Redbox at the $1 price point.
More coverage soon…
Full press release after the break.
Warner Bros. Home Entertainment and Redbox Announce a Multi-year Distribution Agreement
Companies Agree to 28-Day Window for DVD and Blu-ray Titles
BURBANK, Calif. And OAKBROOK TERRACE, Ill, February 16, 2010 – Warner Bros. Home Entertainment Group and redbox today announced a new multi-year distribution agreement that will make Warner Bros. new release DVD and Blu-ray titles available to redbox customers after a 28-day window. The agreement also marks the end of the lawsuit that redbox filed against Warner Home Video in August 2009.
“We are very pleased to have had the opportunity to sit down with redbox and negotiate an arrangement that benefits both parties and allows us to continue making our films available to redbox customers,” said Kevin Tsujihara, president, Warner Bros. Home Entertainment Group. “The 28-day window enables us to get the most from the sales potential of our titles and maximize VOD usage.”The new arrangement provides redbox with reduced product costs, sufficient quantities of product and optimal stock levels four weeks after street date as well as extends redbox’s access to Blu-ray titles, which redbox is currently testing in select markets. The agreement also provides Warner Bros. the opportunity to maximize the sales of new release titles as well as video on demand and other forms of digital distribution.
“This agreement enables redbox to fulfill our commitment to providing consumers affordable and convenient home entertainment,” said Mitch Lowe, president, redbox. “By agreeing to a delayed release date, redbox can now acquire Warner Home Video titles at a reduced product cost, preserving value for our consumers and increasing customer access to Warner titles at redbox locations nationwide.”
Warner Home Video and redbox will be implementing delayed availability during the month of March and will reach a four-week window by March 23 with the release of The Blind Side. The new agreement will run through January 31, 2012. Redbox has also agreed to destroy Warner Home Video content following its lifespan in kiosks.“The 28-day window for redbox balances the economics of our relationship while continuing to offer great value to their customers,” said Ron Sanders, president, Warner Home Video.
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“This accord establishes a mutually beneficial relationship that will foster an ongoing and productive partnership.”Warner Bros. is currently a leader in many home video categories including total video (DVD and Blu-ray combined), Theatrical Catalog video, TV on DVD, and Blu-ray and will ensure the DVD rental company access to sufficient quantities of Warner Home Video titles including The Time Traveler’s Wife, The Box, The Informant!, Where the Wild Things Are, The Blind Side, and Sherlock Holmes.
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this won’t affect me @ all. i already have netflix and an AMPLE queue of movies on the way from there. i rarely even rent from redbox anymore, and usually only now and then when i don’t wanna wait for netflix cuz there’s a backlog on others ordering something. won’t change my habits @ all, as netflix’s deal to do this hasn’t changed my habits either. this WON”T cause me to buy any movies. i haven’t been buying movies for some time and i still won’t. the only positive thing i see out of this is that redbox can take the $$ it was paying the lawyers over this BS with the bloated dying studios and put that into further infrastructure and product improvement. :)
A 28-day wait??? REDBOX – YOU’VE GOT TO BE KIDDING ME!
Netflix already does it for WB movies since January 2010 “…Netflix Inc. will delay sending out Warner Bros.’ latest movies by nearly a month in a concession that the DVD-by-mail service made so it could gain rights to show its subscribers more movies over the Internet…..The 28-day rental moratorium on Warner Bros.’ newly released DVDs and Blu-ray discs is a first for Netflix, but it probably won’t be the last. Netflix hopes to reach similar deals with other major movie studios later this year, using the Warner Bros. agreement announced Wednesday as a template.
Warner Bros. Home Entertainment’s scheduled Jan. 19 releases of “The Invention of Lying” and “Whiteout” will be among the first movies that won’t be immediately available to Netflix’s 11.1 million customers…..”
Does anyone know the address for Netflix?
netflix has all ready made the same deal with fox I believe a few weeks ago
Sentiment is the same. Screw ’em both. For $8 a month I have ample q on netflix. There is no movie I want to see enough to pay $5 to rent or wait 28 days to get it reasonable. As for buying it retail… HAHAHA I own 4 movies of the Harry Potter series that I purchased. And a long lost copy of the 1980’s Labyrinth with David Bowe.
I don’t waste my time with broken machines and lack of stock anymore. Netflix instant q all the way.
gotta agree with c
been trying since 02/02/2010 to find the movie “fragments”. checked 50 redbox’s to try and reserve it online. all were out. emailed redbox three times before finally receiving a reply. they said “were sorry that movie is no longer available”. probably never had it. will never go back. will stick with netflix streaming and an ocassional disc. much bigger selection and much less hassle.
Redbox did have Fragments because I got it at a local Redbox kiosk around 5 or 6 weeks ago when there was that rush of promo codes, like acme25 or snsv25, or whatever. Just checked my local Redboxs and I see my local kiosks are no longer carrying it . FYI, the movie wasn’t that good. Started off like the movie Fisher King, if I recall that movie correctly, then it was just plain stupid and the ending wasn’t anything to be on the edge of your seat for :-(
Time to get a Netflix account! It will be so much less hassle and more movie titles.
Well done Redbox. I think in the words of Sarah Palin , Redbox shouldn’t think of this as retreating, but rather reloading. I don’t think Redbox should feel defeated or that they somehow gave into the studios by agreeing to the 28 day delay. Rather they should feel they made the best decision for their Redbox customers. Now they will be able to keep their low $1 rental price (maybe even a few codes :-), reload their kiosks with a better selection of Warner movies, and their customers will know exactly when to be guaranteed certain new releases in their local kiosks. Hope Redbox makes the same agreement with Fox, etc. And for those Redbox customers who are now having tantrums of defeat, just go pay $5 elsewhere to rent your new releases. Of course, once the studios now release that even with a 28 day delay on rentals their dvd sales are still declined/down, they’re going to find something or someone else to blame it on other than the truth that they “overvalued” in the first place their actors/actresses/directors, etc.
That’s okay Redbox, I’ll wait! I have no plans to buy any of these DVD’s, and I’m not gonna go to Blockbuster or wherever because it’s just too much of a hassle and I like to only pay the $1.00.
Looks like Redbox buckled under pressure. I liked Redbox cause I could get new releases on the release date. Who wants to wait 28 days after the release to see it. I have netflix and get new releases the same day that they are released, so why can’t Redbox rent them out the same day they are released. Good-bye redbox. Guess I will just have to go to netflix 100% now.
Netflix has agreed to the same 28 day window, so good luck with that, lol.
Really? Then that makes it even less of a big deal since almost everyone that rents will have to wait. I wonder if Blockbuster and/or Hollywood Video will still have them on release date. I could care less about when I see the movie, as long as it stays a buck.
For now, it appears Blockbuster Express will have them on the release date since they appear to be stocked from their brick and mortar stores. Also for now, the rentals are $1 per night. Who knows for how long but if they also follow the 28 day eventually, then no biggie. I’ll just wait for 28 days before renting.
Incorrect. BBExpress has nothing to do with Blockbuster. BBexpress is owned totally by NCR. NCR must pay for new releases. NCR rents the BB name.
Hollywood video is no longer around in my state, and blockbuster doesn’t have kiosks around. Their in-store rentals are 4.99 for new releases, so even if they have the movies on release day, I’m waiting for it to come to redbox. Sorry BB, I can rent 5 movies from redbox for the cost of 1 from you guys.
well…Warner can either get their cut of my $1.09 now, or in 28 days. I have a very well used Netflix account with 3 lists. Between those 3 lists, my family and I have some 600 titles (tv shows take up a lot of slots, fast) and even though Netflix has to wait 28 days before releaseing Warner titles, no biggie. I’ve got tons of movies to watch.
I’ve already waited this long to see it on DVD, whats another 28 days? Besides, if I really, really like the movie or know 100% for sure I, or someone in my family will love the movie, I’ll buy it when it first comes out. If I’m not sure I’m going to like it, I’ll just wait the extra 28 days to cough up the 1.09 or wait for from netflix.
As for redbox, while I rarely rent from them- I love them, I’ve watched some pretty quirky stuff for $1.09 that I’ve gotten from them and some new release titles I didn’t want to wait on from netflix.
all you people jumping on the netflix bandwagon read the archives for january netflix makes deal with warner brothers
They already made a deal with Warner Brothers and are on the 28 day delay.
who cares what deal they made… it’s the same all the way around if you don’t want to pay retail or $5 to rent it at a chain store it’s 28 days… Netflix gives all you want for a set rate. Redbox gives you for $1/night. 28 days is the same all the way around… It’s like hollywoods old MVP program.
The 28 day wait for netflix, redbox, etc isn’t going to make anyone run out and buy the darn DVD for $20. And I sure as hell ain’t paying $5 for 1 night, I expect that many people share my sentiment. There is no movie worth seeing “right now” we can wait the 28 days.
I can wait 28. I can wait 28. I can wait 28. I can wait 28. I can wait 28.
bosco11…….I can’t say it any better than that!!!!!
I don’t think this 28 day delay will increase there retail sales or make people want to buy a movie more because they can’t rent it for 28 days. They need to look at why people are not buying movies and give the people what they want. People want quick and easy and cheap and most movies they crank out now are not worth the price they want for them. I’ll just rent from Blockbuster express or DVDexpress or a local video store that’s not effected by the 28 day delay. But I guess this will increase sale at the flea markets for bootleg movies.
JSJ…I agree, but for those of us with no Blockbuster (already closed down) or local video store, we are screwed.
What’s with all the whining about the 28-day delay? If you’re waiting for it to be released to DVD, you’ve already waited at least 17-weeks since the movie originally came out in the the theaters. What’s another four weeks?
If this will allow Redbox to keep their $1/night pricing, I think that it’s a good tradeoff. I’m not so tied to a movie’s DVD release date, that I woould go out and buy it. I’ll just watch something else and get used to waiting a month for the (Warner) new releases.
BTW, Netflix agreed to a similar 28-day delay with Warner ( see http://bit.ly/9RV1nn ).
Redbox has no choice but to follow through and make deals with every other studio now for a 28 day window if the studio wants it.
They can no longer use the argument that it is anti-competitive when they have agreed to a deal with one studio.
I think you will see similar deal announcements with all the other majors studios in the next few months.
Yes, but now the studio’s can no longer claim that Redbox is unwilling to make a deal either. I wouldn’t be surprised if they made more deals but I would bet they don’t make deals with everyone. I think the demands of some of the studios are too outrageous.
I think that Redbox would probably be happy if they could make deals with all the studios on these terms.
Wrong. The warner deal means they don’t need fox & universal deal for now. The work around just got very easy. No reason to do more 28 day window deals unless some other studio wants it badly. Bravo redbox.
Guess its time to start up the torrents and usenet. They want to deny my movies, ill deny their paychecks. Time to boycott this hollywood fiasco.
From one Victor to another…well said!
Running to Netflix isn’t going to help, they have been forced by the corp. greed of the movie industry into a similar deal.
Don’t give into the studio strong arm. ONLY buy movies you just must have.
Warner, Universal, and Fox are all fat cats that screw us at the box-office with horrible movies. Holding back on the releases to NetFlix and RedBox and issuing them to Blockbuster and Hollywood Video/Movie Gallery is messed-up. The sale of dvds at Walmart and Target will dramatically drop too. Why? If we rent a movie and like it, we have the option to buy it. But many of us don’t have a Blockbuster in our neighborhood…and more Movie Gallery/Hollywood Videos are closing their doors. Redbox is our only option. Anyway, most new releases don’t make money unless they were box-office hits. Holding out will hurt the greedy movie makers where it hurts…the wallet. If we could boycott by not buying or renting any movies except Lionsgate and Indi film releases…it would send a huge message to Hollywood’s Big 3.
While I can see people who really want to get a video to rent right away going somewhere else, so I did see some reason to perhaps offer $2 the first 28 days, of course I didn’t account enough greed into the scenario and realize even that wouldn’t be enough for studios. Also once Redbox starts moving away from $1 what’s to stop the price from going up each time agreements are re-signed. Once this 28 thing gets rolling with all the greedy studios it will be no big deal because there will be something I haven’t seen each week, but i’m still spending the same money and they are getting it later, oh well. I still hope this does not apply to every studio and that many will choose to continue to get their money 28 days earlier.
As I indicated, the last quarter’s numbers indicated that Redbox was in trouble unless they made a deal with the Big 3.
I still think the better deal for Redbox would have been to raise their prices but this will help to stem the loss of blood.
I suspect the execs at Warner are chuckling all the way to the bank tonight. They really put it to Redbox on this one.
Dorothy,
You are clicking those heels furiously. Just cause you wish bad things upon redbox doesn’t mean they will come true. With this deal redbox can tell the other two to pound sand. If warner gets anything other than a token increase in sell through I’ll be shocked.
As usual, you are wrong.
Redbox needs the other 2 of the Big 3 just as much as always.
You underestimate the anger that people were feeling towards Redbox. The fanbois here still love it everyone else was starting to notice that Redbox had no copy depth on the big titles.
If Redbox wants to stay in business, they’ll settle with the other shortly, mark my words.
‘If Redbox wants to stay in business…’
You are dreaming. Do you envision a bankruptcy filing unless they settle? Give me a break. They’ve grown to a billion in revs despite having poor studios relations. Sorry small guy they ain’t going away. Get used to it.
I want them to lower prices on DVDs. We’ll change the consumer invite to ‘DVDs starting as lows as $.50’ (select back catalog of course). That’ll wake you up.
billions in rev and no profit.
They are one minor push away from being in the red.
Do you really think their investors are going to stick around if they start losing money hand over fist?
So yes, “If Redbox wants to stay in business…” is very appropriate.
Learn to read the numbers FLON.
What will Warner do when DVD sales continue to slide even with 28 day window…cut Angelina Jolie’s salary? Probably, then it will be a war between studios to get their content to the consumer ASAP…bravo Redbox, you have done your homework.
Redbox haters forget or are not aware that Redbox is the child of its mothership -McDonalds..home of the value meal.
Can wait to rent Avatar BLUERay for $1….
Birthed by big mac but the teeth were compliments of wal-mart. Guess you got to give credit to netflix as well for several things including helping to run all the stores out of town and supplying a seasoned executive.
looking forward to Redbox-Netflix merger(wonder why both logos are RED…hmmm)
About a zero percent chance of that happening. The Companies wouldn’t mesh much imo.
I kicked MickieDs cold turkey after watching “Super Size Me”….I can wait 28. I can wait 28. I can wait 28. We wait months for a dvd release. We can wait 28. Wadda these pogs think we are, lemmings? lined up at Redbox like video zombies? waiting for our next video fix? Nuts with em. There are many alternatives and the one that will hurt them the most will be simply not watching their pathetic product. I can wait 38, 48, or forever. Maybe I’ll do something constructive again, like read a book.
If I can wait months and months for it to come out on dvd I think I can wait another 28 days.
I think what we will see eventually from all studios is a 28 day window where you can purchase the video, and then it will be available to rent from anywhere after that. If the studios are not out to take down redbox but to merely try and make a buck by selling the discs before you can rent them, then wouldn’t it be in their best interest to block all rental stores for 28 days, not just mail order and kiosk? I’m betting that by the end of 2010 a new policy will be in place for this option.
Ok, now everyone can take this as you will. Imagine this with a big production voice over and dramatic effects as it is read.
IF (but if here) I was a nice happy local yokel, who respected authority and did as I was told, I would just have to sit here and take this. I would have been all about keeping my mouth shut and being good. I MIGHT event have had kids, a spouse and myself stop doing anything wrong, and rented movies from Redbox like a decent, respectable person, who cares that Hollywood needs it’s cut and so does the little guy like Redbook and myself with a great price.
WELL…
I would have read this and freaked and flipped. I would have become a rebel against this corporate traveling circus whose over priced, and over paid leverage was not going to work on. I would have been ready for this years back, but waited for just the right moment to spring forward when I had heard and seen enough of the flogging of customers.
One bomb they are left trying to stop isn’t working…
TORRENTS!
I would have people on the inside, releasing Emmy Award screeners, New Releases before they were set to come out, and flat out any and ALL movies coming out. I would REFUSE to wait for lower rental rates by downloading torrents, the same as we all but crushed the theater industry by switching to home rentals. I would become knowledgeable in torrent engines, learn about IP blockers, torrent site scans, and swapping cracked DVD’s and BlueRay disks with friends. I would teach my friends and neighbors, my children and family, and ask them to teach their friends and families.
I WOULD CRUSH THE INDUSTRY LIKE THEY CRUSHED MY HARD EARNED MONEY AND THE HOPES AND DREAMS OF THE PEOPLE AND COMPANIES LIKE REDBOOK, YOU AND I.
I would NOT be part of the problem, I would be the bringer of the solution!
And so it would begin. Those who would bow to the tyrant leaders demands of 28 days or $2, and or NetDix (Netflix), Cockbuster (Blockbuster) Video (home of the butt raped wallet… really $5 for a movie that costs $4.99 NEW at Walmart?! and I don’t even keep a copy??? WTF!!), and any other lame excuse to continue to conform to ways and rules meant to make YOU the price slave they expect or….
You would start making the services they all offer worthless! I might (since this is all hypothetical and no one actually downloads torrents OR makes it their business to smuggle FULL COPIES of advanced Hollywood movies out to be copied and returned all to continue to chop the Hollywood giants down and make them humbly beg for services like Redbox to come back and make it affordable for everyday guys like me to legally rent a new release).
The moral to the story is, that maybe losing a little (Warner Bros talking to you here) would be justified, if it meant losing it all in the following weeks due to the HUGE turnaround in views from people downloading the torrents for FREE, and you losing what viewer dignity you had left. I see nothing pushing me as a consumer to keep conforming…
Look at the reality…
$16 Opening Day Ticket,
$15 DVD Sale cost,
$7.99 to $4.99 Cockbuster Video,
Waiting for available copy plus cost with Netflix,
and lastly poor Redbox with only a $1 charge but 30 days behind those other forms of viewing.
Screw it I say. Free is free, and beats all the other hands no questions asked. I suggest that some of the people reading this look in to torrents or getting help from friends who can set you up or get the movies for you. I was set up to walk the straight and narrow, but they keep pushing. Time to push back HARD!
Redbox, I love yah, but grow some balls and renegotiate your terms better. I mean COME ON… this was Warner Bros, the company that brought us Batman Forever would have us wait an extra month to see it?
IF I WAS DOWNLOADING (Which I am not saying I do) I would have seen the new release before it made it on screen at the movies, AND for free. I guess they must REALLY hate people who do that? I mean IF I did that, I would have REALLY TRIED to go all straight edge and be honest by using Redbox, but news like this would REALLY make me change back to dishonest means, IF I DID IT THAT WAY BEFORE!
Dude….what a great post !!!! I can dig it man !!!
I realized a few spelling errors after I posted my last comment, sorry. I was in a rush to complete it after I read the post.
I really can’t believe I kept misspelling Redbox as RedBook! Sorry, but I hope my point is well known. Those who were drawn away from Torrents to Redbox before, will now be returning to torrents.
Awesome! Piracy is always the answer.
Loser.
Small guy,
They are depreciating units over 5 years. As more of the units are fully depreciated you’ll have your profits. So yes billions in revenues and no gaap profits yet. However cash generation is king and redbox is throwing off plenty of the green. If they stopped buying new redbox units they could pay a huge dividend.
So small guy learn to read the numbers more closely next time. You have to read both the P&L and CFFO statements.
Estimated lifespan of their machines is, wait for it, 5 years.
Shocking isn’t it.
I addressed your no profit comment. Are you saying redbox doesn’t generate cash from its installed base of units?
And oh gee, they depreciate the units over 5 years so that must mean every single unit has to be replaced with a new one after 5 years right? Perhaps they will last a bit longer than that and their life will not be tied to accounting convention.
Every comment you make is quite pessimistic. Don’t pretend to be open minded on redbox.
Go back and read my comments again FLON.
You are attacking me rather than what I am saying (ad hominem).
I am not anti-Redbox. I am pro-truth.
If you would rather stay deluded, feel free. I choose truth instead.
This is stupid. You can’t get new releases on time with any rental except brick and mortar stores now. Also what’s the whole point of fighting against the movie studios just to go around and end up agreeing to there terms in the end anyway. Guess this is going to lead to the same thing with Fox and Universal now. Heck can’t even get new release right with Netflix most of the time. I’m still waiting for Whip It and have been since it first came out. Along with like 5 other titles that have been a long wait status since they first came out.
I think piracy is going to end up going back up.
My point exactly.
Anyone know of a good local rental place in San Antonio, TX.
I am really disappointing in Redbox. I thought that they were the answer for the common man, but truth be told they are probably as greedy as the rest… awesome mission statement but their heart isn’t there but in their wallets instead.
I hear the arguments that this is a good thing and keeps costs down, but I disagree.This is just the fist step. They’ve given into the major corporations and will do so again at the expense of their customers. I honestly do not trust that
$1 DVDs will be around for much longer from this company.
I see most of the folks share my sentiments. I’ve got two words for the greedy bums, freak em. Do they really think most of us are so shallow we’ll be forced to buy or rent our movies now that they’re not available via less expensive sources for 28 days? You talkin to me? You talkin to me? You talkin to me? I’ve got a suggestion. Everyone adopt the new mantra “I can wait for twenty eight” If those greedy studio executives think we can’t wait a month for their generally mediocre product to hit a Redbox, they’re back on the crack pipe. Remember, “I can wait for twenty eight”
This is just one more strike against Redbox. I’ve been sick of their broken machines and the kiosk being “full” every time I try to return a movie. When you call them it takes an average of 15 minutes to get someone to answer. I’ll miss them but I think I’ll switch over to Blockbuster Express or Netflix.
I don’t see what the big deal is. It will stink for the first round but once I am on the 28 day schedule it will not even be noticed cause they will just be cycling later. So after that first wait I won’t even notice cause next week a new release will be coming out.
You will notice if you watch TV. The adverts will be letting you know when the DVD is available at non-Redbox rental locations.
That’ll be an easy message to get across to consumers…
‘We have all your warner movies available now at well north of $1, redbox doesn’t, so come on in to our store because it may not be open by the time you see this commercial’
Does BBI even have any money to advertise? Think they tried that in Q4 and well…you know how that went.
Right. Ok. You sure do know something FLON.
The studios advertise their product as well, or did you forget?
Warner will be letting people know when their movies are released. Redbox customers will not find them though when the adverts are on.
Simple enough for you?
It’s easy to find different paths to your pre-ordained conclusion about redbox. You might want to ask yourself though whether or not you are being realistic or are just reaching the conclusion that you want to see happen.
Hmm, this wasn’t an attack on Redbox at all.
I am pointing out that there are advertisements on the television that say when a movie is available on DVD.
Are you trying to say that I am wrong? Because I’m not.
Use your brain and realize that I am not against Redbox. I am just for reality.
Anyone who says they won’t even notice that a movie is available on DVD until it shows up in a Redbox 28 days later is either living under a rock or lying to themselves.
You choose.
Who watches commercials?
The point is we’ll still have new movies to watch.
28 day wait? Guess that means I’ll just download the movie for free then. Not sure how much money they think they will be saving by this move. Movie out I want? Redbox doesnt have it for a buck? Wait 28 days or download it? Yeah, I’ll download it and watch it tonight.
I follow the path of least resistance. iTunes made music cost a buck, and it’s easier to find and cheaper to buy than the time to find and pirate it, so I buy it from iTunes.
Redbox did the same for movies. Check if its in stock from my iphone, rent it for a buck? Done. Not there because of a 4 week waiting period… path of least resistance says download it.
Stupid stupid stupid.
Right, resort to illegal methods to obtain product that isn’t yours.
You are an upstanding individual and I suspect your attitude will come back to haunt you some day.
Pro-truth?? Like your comments that do not recognize that redbox’s existing base of units throw off free cash? You harp on lack of earnings but fail to mention cash generation. Is that the truth or is it deceptive? On this specific subject you choose to ignore the rapid payback of investment and focus on the lack of profits. Well even under your one-sided viewpoint you would need to recognize if a unit is utilized beyond the 5 year depreciation schedule that GAAP profits would flourish. You offer no recognition of the nuances of accounting convention versus real world economics (ironic that studio execs are experts in making cash generating movies ‘lose’ money especially when it comes to paying out to others). You are biased towards a 28 day window which is fine. Just stop pretending to give the full picture on how the company is performing during the work around. Since you want a 28 day window your bias is to claim redbox is suffering mightily through the triple work around. By many measures they are doing a tremendous job navigating through a challenging period. This is a land grab right now and some of their decisions angered the studios but it seems pretty obvious to me that attaining scale first was the intelligent thing to do.
I’d bet you said similar things about netflix 5 years ago. Too cheap, too studio unfriendly, no profits, arrogant management team, the more subs they have the more they lose money etc etc. That was the conventional wisdom on them before they bankrupted the rental industry.
Anyway let’s stay focused on your repeated attempts to ignore redbox’s ability to generate cash in the present.
FTR real cashflow decreased in the previous quarter due to increased costs and decreased expected revenue.
That has been the point I have been making all along.
Any company that has slowing growth but increasing COGs is going to be in trouble.
The 28 day window is a way for Redbox to reign in their costs. Without it, COGs would continue to increase until they were losing money.
The numbers are right there on their site if you want to read them.
BTW, I slagged Netflix until they did the correct thing of throttling their heaviest renters. That’s because without the throttling, Netflix would lose money.
I am not against a company making money. I am against a company that has a business plan that will obviously lose them money while they claim it is a money making machine.
How nice you are against others losing money. Thanks for your concern.
So now you are being more clear – redbox does generate cash. Yes it may vary quarter to quarter but to say no profits doesn’t give a full picture of the financial situation.
‘Any company that has slowing growth but increasing COGs is going to be in trouble.’
Please. This is a new industry with dynamic situations. Using some catch all phrase that is hard to argue with doesn’t really add much value to the discussion. Its a land grab my friend with the world’s largest distributor about to die. Perhaps it made sense to proceed aggressively and worry about studio relations later. BBI’s legacy relationships keep it moving as slow as a turtle both for subscription and kiosk. Now they are dead. So yes at times it may make sense take a hit on COGs if you are positioning against competitors.
‘BTW, I slagged Netflix until they did the correct thing of throttling their heaviest renters. That’s because without the throttling, Netflix would lose money.’
No sh-t. Did you give them the idea? Get off your high horse.
You asked a question on my opinion of Netflix and I answered it.
Then you attack me? You need to relax son.
In regards to COGs, you forget that when a company increases the number of locations they have, their COGs should go down. If it doesn’t then scalability is drawn into question.
With Redbox having to use the workaround for the last couple of month, this effect was being shown in their numbers. The workaround showed that scalability was negative on their growth, not positive.
This is similar to their prior deal where they were obtaining product at a COGs discount over any other retailer in the USA. That was not sustainable either because the studios were not going to allow it to be .
Redbox having the Big 3 on a 28 day delay plus the rest of the industry on day-and-date will work for them. Sadly, I expect the other majors to decide to go to the 28 day model once their current agreements expire and that will put Redbox as a second tier rental choice for most people.
That is not to say they can’t make money with a 28 day delay from the majors. I’m just not sure that their income stream will warrant the current Coinstar share pricing.
BTW, corporations shut down profitable businesses all the time. Redbox needs to provide a decent return on their investment or they will shut down too. They are not doing that now. The changes coming will likely help them get there but if things stayed the way they were, they would be gone in 18 months tops.
John, YOU’VE BEEN VINDICATED!!!! – Ok what allot of people seem to not understand is that while redbox was in theory a brilliant idea, the reality was they were on very thin ice out of the gate. Their business plan was based on certain sweetheart deals and running on a very thin margin until they could effectively put the independent stores and BB (brick & mortar) out of business. unfortunately that ice has effectively broke, as John has clearly stated time after time. If redbox even looses 2 of 10 customers, they will be on the fast track to bankruptcy. My local store has New releases for $2 on the original release date, I would be hard pressed to believe 2 of 10 customers won’t switch back to the local video store (assuming their prices are more reasonable than BB). As for the torrents and illegal downloads, the majority of users and even some of the more savy ones could be in for a hell of a fine one of these day’s real soon(they will start making examples). As for the user’s that had stores in their areas that have been closed down due to trying to compete w/redbox, well i guess you got what you deserved. I’m just glad it happened before they put all of the stores out of business and raised thier prices to $3, and yes i have no doubt that eventually that’s exactly what they would have done. Good luck Redbox, better tell the accounts to sharpen their pencils!!!!
@Tee How much do you get paid as a shill? Are you on a per word or per post basis?
This sucks!!! And I won’t ever watch Warner Bro. again and stop Redbox rentals as well… I rent there alot seeing as I have 5 kids and 3 adults in the home.
I guess that rules out the kids movies like:
Harry Potter
Cats & Dogs 2
Guardians of Ga’hoole
Yogi Bear
I think your kids are going to hate you if you hold to your boycott of Warner.
Ahh, John, you sorta’ really showed your true colors with your response comment. You don’t give a hoot that Jessica says she’s going to stop renting from Redbox because of the Warner 28 day delay, BUT you “warn” her that her kids are going to “hate” her if she doesn’t provide them with the many wonderful Warner movies …You even dangle the names of a few of the Warner movies just in case Jessica doesn’t realize how, as a mother, she’ll be neglecting her 5 kids if she doesn’t provide them for her kids. Okay John, so all along you’ve been telling everyone to just wait until Redbox provides their 4th quarter earnings to prove how in the tank Redbox is. Redbox just released their 4th quarter earnings with a HUGE increase in earnings/profits and then you minimize those earnings with the old warning that they won’t be able to sustain their business model for much longer. All along you’ve been arguing that Redbox is demanding special deals with the studios to purchase their dvds at a low cost. Now Redbox compromises/agrees with Warner to the 28 day delay , and you still have a problem WITH REDBOX. What exactly can Redbox do to satisfy you–as a person involved in the industry? If Redbox agrees with all the studios to the 28 day delay, and Redbox keeps their rental price at $1, what then will still be wrong with Redbox in YOUR opinion?
I think she is silly to hate on Redbox for the reason she gave too.
RB, look at the real numbers. Their real growth level was not very good. Their profit/machine dropped. Their cost per machine increased.
The reason for this was the workaround.
If Redbox can settle with the big 3 it will reduce their costs substantially.
Will it cost them some revenue? Yes. But their profit / machine will increase.
I have no problem with Redbox and their $1.00 model if they have a 28 day delay on New Releases. I still think they should have offered to go to $2.00 / day (which I think they eventually will in areas where they have eliminated all competition) and have same day release but they pissed off the studios too much and I think that option was off the table.
So to sum it all up, if Redbox accepts a 28 day delay on the big 3’s releases I think that they will be a successful company.
I think this is a fair result. It creates a kiosk/rent-by-mail window of 28 days which allows the industry to grow sales and rentals again.
Stay focused. I pointed out the insincerity of your no profits comment. Simple. Accept that.
‘BTW, I slagged Netflix until they did the correct thing of throttling their heaviest renters. That’s because without the throttling, Netflix would lose money.’
Your comment has an air of arrogance that is annoying. An obvious observation as well.
COGs leverage for a unit/store is difficult for any company. Not sure why adding more stores should allow for great leverage in costs/inventory – some sure but not much. The leverage comes below the gross margin line.
‘Sadly, I expect the other majors to decide to go to the 28 day model once their current agreements expire and that will put Redbox as a second tier rental choice for most people.’
They already are a 2nd tier option my friend. Majors simply cannot force redbox to take whatever model they want. If they could there would be no such thing as redbox today. 28 day is a function of lower costs. If it’s not low enough redbox won’t do the deal. Besides the jury is out on what the 28 day delay will do. Some studios don’t see a whole lot of value in it obviously.
I don’t agree with you. I think the unit economics of a redbox are attractive. They pay for themselves in 2 to 4 years. My guess is that kiosks will be dishing out packaged product well in excess of the depreciable life of 5 years. The economics may get better or worse going forward so we’ll see.
‘BTW, corporations shut down profitable businesses all the time.’
Ya don’t say. Name three.
Who do you think is going to rent all those pesky DVDs anyway in your 28 day window nirvana? Brokebuster? Moviegallery? Economics no longer support rental stores. BBI blew it. By trying to be in every channel they insured that they would excel in none of them (except for stores).
You are misrepresenting what I have said but I expect no less from someone like yourself. What happened in the last quarter was exactly what I had predicted would happen.
However, shall we make a wager on whether Redbox signs a 28 day pact with the other 2 of the Big 3? I say that before the end of the summer, Redbox will have a 28 day delay with all 3. If it is not true, I will happily say that you were correct in your assessment of the situation.
However, when Redbox signs that agreement with the next 6 months, I fully expect you to proclaim me to have right and yourself to have been wrong.
Having said that, you aren’t likely to be around here 6 months from now so while I will hold up my end of the deal, I suspect you won’t.
FTR, BBI still brings in more money than Redbox does. While I think they still need to trim a lot of fat, they have many profitable stores in their company and will likely benefit greatly from the 28 day delay.
Don’t let your hatred blind you.
Here is what you said…’billions in rev and no profit.’
That is not a fair representation of redbox’s financial situation.
You didn’t name 3 profitable businesses that have been shut down.
Some reasonable points I made…I pointed out that in a land grab it may make sense to suffer higher COGs if you can grow faster – no comment here. I pointed out a redbox may produce revenue in excess of 5 years – no comment. I pointed out retailers have difficulty leveraging size into gross margin gains – no comment.
I’ll take that wager for fun. Being right or wrong won’t matter much because we won’t know how much lower the DVDs will cost. At the right cost 28 days is fine. So for fun I’ll say redbox doesn’t need to do another deal right away. Don’t pat yourself on the back too hard if you win given what I’ve said above.
Why wouldn’t I be around 6 months from now?
‘FTR, BBI still brings in more money than Redbox does.’
What in revs? Sure they are bigger than netflix – but so what? They are so vulnerable right now. If any big studios go cash up front they will be chap 11 overnight. They are between a rock and a hard place. The junk bond scavengers own the thing now and they usually ain’t fun to play with.
You said you like to explain the economics of the business. You also said you expect redbox’s revenue/earnings to plummet based on a scenario you see playing out. I think you are wrong based on the scenario I see playing out. That is called speculating on the future. You could easily be wrong as could I. Explaining economics and guessing at the future are not the same thing yet you speak as if they are.
I believe it will prove difficult for the studios to herd home video dollars around as they see fit. Time will tell. Someone else said it best…’As long as they rent for a buck, people will jump on it.’
I agree.
Dude, if you expect me to rebut every thing you say you will be waiting a long time.
But since you think that Redbox does not need to do another deal I’ll ask you one questoin. What percentage of the market share do those other 2 companies control in the entertainment industry?
Redbox needs the other 2 badly. Otherwise they still have to do the workaround.
Speculation works better when you have a realistic grasp of the facts. Something which you do not. I’ll take my “guess” over yours any day of the week.
I can wait for 28. Before redbox, I would wait until the new releases were moved to the $1 general movies section at my local video store.
Then you are the customer that the studios want Redbox to have.
Things should be fine for you from now on.
And I’ll take my guess over yours any day. Your realistic grasp of the facts = bias. Reminds me of Upton Sinclair’s quote.
The big 2 have a high share though the Redbox friendlys outnumber the unfriendlys now.
At least name 3 profitable businesses that have been shut down.
Man, you keep mixing up the threads. Makes it hard to follow the discussion properly.
Pandemic, Pixstream, DICE – all 3 were profitable when bought up and then were shut down.
Happened all the time in the 80’s too. U.S. manufacturing company would get bought up and then sold off for parts even if they were profitable because the vultures could make more money immediately by doing so.
BTW, in 2009, Fox had 13.2% of the box office and Universal had 8.2%. I know that research and real numbers are not your thing but I thought I’d help out.
So, the reality is, if Redbox wants to ignore over 20% of the market for movies, then yes, they can ignore Fox & Universal. If they want to carry those movies though, they will have to continue the workaround and that will continue to cost them money.
It is in Redbox’s interest to settle with F&U so that they do not have to continue paying so much for 20% of their product. Not carrying them properly has already hurt them ($15 to $20 million dollar in the last quarter alone) so I suspect a deal is in the near future.
With the Warner deal, the lawsuit is pretty much dead in the water. No point in spending any more legal fees on that. It is time for Redbox to agree to a 28 day window with F&U and they will likely do that soon.
BTW, I still think the better option for Redbox would have been to raise their price and give a proper cut to the studios but apparently that was not even on the table anymore because that bridge was burnt by Redbox. They need a new CEO BTW.
John Small,
I haven’t seen any #’s on what % space in the machine will now be alloted to Warner under the agreement with Redbox. I know Sony, Paramount, & Lionsgate got percentages nearly doubled from what their actual market share was for the last year. Have you heard of any specific space allocated % that will be alloted to Warner.
Joe Schmuck
No numbers released as far as I can tell. Just the vague “…sufficient quantities of product and optimal stock levels…”. I’m betting Redbox wants to get the other 2 to sign before they release any info. Their tactic from last time with S, P, & L has backfired on them and they likely don’t want to make that mistake again.
If you look at it from a Warner perspective, most of their DVD sales happen in the first couple of weeks (as is the case with pretty much with every studio). So with the 28 day delay, they can dump whatever overstock they have left onto Netflix and Redbox and not have to worry about excess inventory (which they’ve had a tendency to quickly reprice anyway).
Redbox has agreed to destroy old copies as well so that will make Warner happy too.
I did notice that this signing made the Motley Fool 5 Dumbest Stock moves for the week but I’m not sure what choice Coinstar/Redbox had left to them. Lowe pissed them off for long enough that Warner wasn’t likely to budged on anything.
Also, Paramount’s temporary deal expires June 30th. I think there’s a good chance that they will negotiate a window with Redbox, also. A lot may depend on the status of the negotiations of a deal between Redbox & Universal and between Redbox & Fox.
I thought I was following you around on different threads but maybe not.
You said profitable businesses get shut down all the time. You’ve morphed that into a lesson I don’t need about the 80s because I lived through them. So sure profitable businesses get sold all the time. They don’t get shut down all the time.
Real #’s are what’s its all about, I’m just focused on other ones.
More interesting to me are the assumptions that drive IRRs. Simple market share #’s anyone can look up on the internet are not so difficult. Turns per disc, nights per transaction, DVDs per transaction, % of turns reserved, indoor vs outdoor IRRs, work around affect on IRR, increased customer throughput affect on IRRs, what a 100% work around might look like, SG&A leverage etc etc. These #’s matter to me.
Studios and Redbox need to settle not just Redbox. $15 to $20mm isn’t that much relative to their size. You think their business will implode with 100% 28 day window so your recommendation to take that deal is dubious. Maybe they will but in essence you are rooting for them to take a deal you think will cause their earnings to shrink. I’m not sure it’ll play out that way but if you really believe what you say why should they take it?
I don’t think the lawsuits are very relevant and don’t necessarily agree with the strategy but I’ll defer to Redbox execs on that one.
Why do they need a new president (I assume that’s what you meant) for Redbox? Cause the studios don’t like him? Studios didn’t like the execs at Netflix either. Sometimes tension keeps things honest. Anyway are we doing July 1st for the bet on more 28 day deals? Remember it’s for fun because we won’t know how much the cost of the DVDs go down.
Reread what I’ve said. I did not say that Redbox would implode. You are drawing incorrect conclusions yet again.
I think I had said end of the summer (6 months) so that would be Aug 31st but I would not be surprised to see the deals signed much sooner than that.
‘That is not to say they can’t make money with a 28 day delay from the majors. I’m just not sure that their income stream will warrant the current Coinstar share pricing.’
Implies that you expect a lower/much lower earnings stream post 28 day window. If that is true there is little reason to pursue these types of deals beyond warner.
Have you considered different IRR scenarios for the units?
End of summer is fine. And you acknowledge that without knowing the lowered DVD cost that we won’t know who’s really right.
“Implode” implies much more than simply lower expectation for income. The mulitple that Coinstar is trading at is only warranted if they can manage to continue to grow at a rapid pace. I believe the 28 day will slow that growth and that in turn will drop the Coinstar valuation.
DVD price doesn’t matter. Having the product does.
Oh I might as well answer myself before FLON claims I am saying that I am not.
When I say that price doesn’t matter, I mean that a massively cheaper price is not the most important decision for Redbox in this situation. Redbox was having to spend a lot of time and money doing the workaround. The 28 day delay, with Warner at least, will reduce that headache and provide a constant stream of product.
That is why Redbox will sign with the other 2 shortly.
So you haven’t considered IRRs for individual units I take it.
You said the post 28 day earnings stream (even though you say there are no profits) would not support the current price. Now you say the growth will slow to knock down the valuation. Which is it?
I assume the multiple (valuation) you are referring to is the PE ratio. There are other valuation techniques such as FCF or steady state earnings that may be interpreted as quite low already. You haven’t looked at valuation any other way correct?
Price matters a lot because there is an exact price decrease that will offset the loss of revenue dollar for dollar at the unit contribution level. If Redbox units do less in revenue but maintain unit level contribution then shareholders are no worse off.
Umm, the answer is both because they are completely inter-related.
Yes there are other metrics. None of them will support the current price with the new model (or old model for that matter).
Obviously Redbox is not going to sign a deal where they are paying more than what they are getting right now. But again, the real benefit of the deal is being able to cut an ever increasing COGs and maintaining a steady stream of product as opposed to the current situation.
Which means the price they pay is not as important as control of costs is. Knowing how much your going to pay allows you to plan ahead. The workaround prevents them from being able to do that.
Slowing growth and declining earnings stream are very different. One implies lower than previous, the other is higher than previous. Not sure what you mean.
‘None of them will support the current price with the new model (or old model for that matter).’
In order for this to be true earnings and other valuation metrics will have to head lower. If there is no benefit to going 28 days you’ve really created no reason for Redbox to settle.
Doesn’t sound like you’ve considered other valuation metrics. Doesn’t sound like you’ve given any weight to the concept that there will be a big depreciation melt starting in 2012. That will be a big driven of GAAP earnings if that is what you demand.
And to restate the obvious like you have there is a combination of DVD cost decline + variable expense decline that would offset revenue decline leaving unit contribution levels unchanged. That is the most important aspect of any deal.
I have two local video stores here in Seattle that blow away both redbox & netflix!
Scarecrow Video
Largest collection of movies in the world! Over 120,000 titles (almost twice the amount that netflix has), place is freaking crazy! Tons of famous people are known to make trips to scarecrow from other parts of the country (Quentin Tarantino, David Lynch, etc). The only down part of Scarecrow is the price, $4 for a movie, but their collection is untouchable by anyone.
Third Man Video
They don’t have the collection that Scarecrow has, but man their price beats both netflix and redbox. They offer unlimited rentals for $14.99 (one movie out at a time, $25 for two out a time). I just finished my first month with them and I did 34 movies in one month for $15, that works out to 44 cents a movie!!! If I take a movie home and ten minutes into it I find I don’t like it, I get off my butt and go swap it out for another. The only down part to Third Man Video is they don’t have the collection that Netflix has (I would say about half as many), but their price is unbeatable!
I like supporting local indy stores and would like to see more people make use of stores like the ones I mentioned above, they aren’t some horrible corporate store like Blockbuster and some of them are offering better deals (like mentioned above).
This will only impact when I eventually view the latest installment in the Harry Potter franchise.
The closest I have to an independent video rental chain is the local library. It usually has the latest releases in addition to a substantial back catalog of foreign and independent films.
that’s usually where I rent movies, excpet for new releases
you can rent online at the blue box today if you have one in your town
i’m late to this discussion. indeed this news does suck, although RB gave a good point saying that this is redbox reloading rather than retreating. Even though we have to wait a month for a WB movie, the movies will be in all Redboxes after those 28 days. We won’t have to search around at diffrent locations. Unfortunatly, this probably means that WB will give them the dvds, meaning they will be rental copies, meaning NO SPECIAL FEATURES!! Oh well.
I personally can wait a month, although I will probably reserve the movie at my library. If there is a movie that I can’t wait 28 days to see then I probably will bite the bullit and rent it online or at BB.
I wish I had a blockbuster express nearby. That gives me a question: why haven’t the big 3 studios sued Blockbuster and other rental kiosks? Their rentals are also $1
BB was giving the big 3 more of it’s rental cut to get the new releases so they must be taking a loss at there dollar rentals. But once they get there foot in the door and RB is out of the way I’m sure dollar rentals will be gone. I’ve seen this DVDexpress going up around town 13 bucks a month for unlimited rentals. Looks like everybody is going to the kiosk machine.
Looks like I’ll just have to pirate them from now on. Previously it wasn’t worth my time / the risk since I could get them at Redbox for $1.
Thank you Corporate America. You’re responsible for my furture life of crime!
Is Theif anything like a thief?
Is the furture anything like the future?
Maybe they’ll offer him a GED spelling class in prison.
Movie Pirates,
They think they are so smart, getting movies before they are released. When in fact, that 2bit 1/2res crap that comes from people sitting in a theater with a camera is just a joke. No matter where you download you can never get a movie pre-theater or even pre-disk release that has the same quality as a blu-ray disc. And rarely the quality of a DVD even. It’s ridiculous. If “My Name Is Earl” has it right, Karma is gonna rape them in a shady prison some day.