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Redbox Goes Fox Hunting, Files Lawsuit

We saw this one coming from a mile away, and now Redbox has made it official. On August 11, 2009, Redbox filed a lawsuit in Delaware Federal Court against 20th Century Fox, in response Fox’s recent demands that would keep Fox releases out of Redbox kiosks until 30 days after release.

From the release:

“Redbox’s cornerstone principles include providing customers with a convenient way to rent new release DVDs at an affordable price,” said Mitch Lowe, president, redbox. “At the expense of consumers, 20th Century Fox is attempting to prohibit timely consumer access to its new release DVDs at redbox retail locations nationwide. Despite this attempt, redbox will continue to provide our consumers access to all major new releases including 20th Century Fox titles at our more than 15,000 redbox DVD rental locations.”

With this lawsuit and the one against Universal, Redbox is now taking on movie studios that put out a total 25% of major movie releases. With Sony, Disney and Lionsgate, they already (or almost, in the case of Disney) have deals with the studios that have about 30% marketshare.

Obviously, the outcome of the Universal case is pivotal here, as it will likely determine the outcome of the Fox suit as well.
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Winner take all.

Which studio is next on Redbox’s radar, and will it be a deal or a lawsuit? Leave your thoughts in the comments and you too could be a winner!
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23 Responses to “Redbox Goes Fox Hunting, Files Lawsuit”

  1. Visitor [Join Now]
    Jennifer D. [visitor]

    Why would they want to keep their movies out of the RedBox for 30 Days? They don’t make Blockbuster wait 30 days! Netflix doesn’t have to wait 30 days! Why RedBox?

    This one makes no sense to me at all…. I hope RedBox wins both of these cases. I wonder who’s in Blockbuster or NetFlix’s pocket over at Fox and Universal? It seems that as many copies as RedBox has to buy to fill their kiosks that it would mean more profit for these companies? If they make RedBox wait 30 days the demand for those titles goes down, then RedBox isn’t going to be buying as many copies. Whoever thought this lawsuit would be a good idea seems to have little understanding of basic economic principals.

    The sales that they are going to loose from the home consumer buying the movies as opposed to RedBox buying the movies seems as if it would be miniscule, given the sheer volume RedBox has to buy.

    Don’t know, have to keep an eye on how this one turns out.

    • Visitor [Join Now]
      John [visitor]

      If Blockbuster charges $4 to rent a new release…they give the studio 37% of the charge ( $1.48) If Redbox get $1 and they share 37% then the studios get 37¢…the studios have a lot to pay for in creating the movie, and they’re in it to make money… the $1.48 wins!

  2. Visitor [Join Now]
    Shannon S. [visitor]

    I love Redbox, and since they have 5 boxes in my town, i have said goodbye to places like Blockbuster, and Hollywood video. I’m not paying $5-$6 for 1 movie. If universal and Fox want to play hardball, they will end up losing money in the end cause there will be loyal redbox fans including me that will wait that 30 days. Screw Fox & Universal!

    • Visitor [Join Now]
      Kevin [visitor]

      I hope the studios win. If you were owned the studio, wouldn’t want the right to protect your product and distrubute it where you choose or would you want it dictated to you. You need to understand the business. Redbox is discounting the product for $1.00 rentals and then selling it off as previously rented product which floods the market with prodcut. By doing this it hurts the studios retail business which is what affords them the money to create the movies in the first place. So Screw Redbox!!!

    • Member [Join Now]

      To Kevin: so the MILLIIONS the studios make at the theaters isn’t enough profit? PLEASE, GIVE ME A BREAK! There’s no end to the studios greed! They make enough already so I say screw the studios not Redbox!!

  3. Visitor [Join Now]
    redbox_renter [visitor]

    Any studios seeking this is totally wrong, especially Fox the farthest Right based-company, which against soicalism and communism for capitalism. Fox is doing the very opposite of what they believe. Redbox, you, or me if have the financial power should able to buy on release date and rent to anyone they wanted to, it is Capitalist market, right? This is SO COMMUNIST as well as holding as Hostages. wtf is wrong with these idiot studios.

  4. Visitor [Join Now]
    FoxWins [visitor]

    First Universal. Now Fox. Next will be Warner Brothers. Collectively, these studios represent 50% of the market.

    Redbox will lose these battles and will have to alter its business model.

    You misers will have to choose: Do you want $1 rentals, available after 30 or so days. Or do you want $2 rentals available on day 1. You won’t be able to have both.

    As I said previously, 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.

    • Visitor [Join Now]
      JML [visitor]

      Listen Redbox is providing a guaranteed sale to Fox and Universal at a much higher volume then the average customers would ever buy. Customers are trying to find any way possible to save money and life their lives and Redbox came in at the right time. Do you think its easy for someone to spend 40 dollars to take their family to the movies then pay another 20 for the same movie? Absolutely not! The customers know Redbox will do what they need to so their customers are provided with the titles they want so does Fox and Universal. Redbox has not devalued the product because customers know what a movie costs at retail. They are rented over and over again the products are not being sold for $1. The people you call “misers” are hard working people trying to provide for their families and provide a little entertainment in their lives as well. I am pretty sure you have done some “miser” actions yourself so don’t be hypocritical. Look at the whole picture not just the money aspect of it.

    • Visitor [Join Now]
      Richard [visitor]

      Take your astroturfing somewhere else. Hope that you didn’t use an IP address that can be traced back to your Fox overlords — or seven degrees of separation from them.

    • Member [Join Now]

      The Netflix model works out to around the same price point, so what’s the point of delaying. It probably has to do with money. Redbox apparently has paid a sum of money to the studio’s they have recently made agreements with. Does Netflix pay a fee too? I don’t know, but imagine they have some sort of agreement.
      From the way companies seem to work these days, if an agreement cannot be worked out, get the courts involved. One side trying to gain leverage over the other to work out a better arrangement.
      In the end I certainly hope Redbox can work out acceptable agreements with all the major studio’s.
      Good luck to Redbox and their affordable price model.

  5. Member [Join Now]
    Bikemiles [bikemiles]

    Redbox CEO in CNBC interview on 8-12-09

  6. Member [Join Now]

    I don’t think companies are on Redbox’s radar for lawsuits. These 2 companies started it by going after Redbox and they are just countering their attacks.

  7. Visitor [Join Now]
    Wendy [visitor]

    I think that REDBOX is a new company that is making a huge breakthrough to the consumers. We love to rent movies cheap and for most of fus in this dwindling economy it is a much needed affordability. I used to buy new movies on a regular basis but after taking in several of my nieces and nephews to raise along with my own children, with no help from anyone, I am no longer able to do this. I won’t rent from blockbuster or netflix. Why would you pay $3-5 to rent a movie when you can buy it for $20. If I can rent it and watch it for $1 I am absolutely going to!! Fox and Universal are only doing this to try and cage the market. Just like Disney..only making movies avaliable for limited times and charging outrageous prices. For those of you that are holier than thou….either you haven’t had to deal with the hardships of the economy yet or you just don’t care. For those of us that have extended families to take care of we are greatful for things like lower intrest rates and $1 new release rentals !! I hope REDBOX wins this suit..everyone knows our country could use a little cheap quality entertainment. Why would they want to punish those of us that actually pay to rent or go see one of their movies when there are so many out there actually pirating them and not paying a cent.

  8. Visitor [Join Now]
  9. Visitor [Join Now]
    Jim [visitor]


    Warner to Offer Kiosks Titles on 28-Day Delay

    By : Erik Gruenwedel | Posted: 13 Aug 2009

    Warner Home Video Aug. 13 informed its wholesalers that beginning in October it will offer rental kiosks new release titles 28 days after street date.

    The studio also said it would engage solely in direct relationships with kiosk and mail-order subscription vendors.

    “Warner will be in discussions with both kiosk and mail-order subscription vendors, offering business options that will allow all parties to grow their respective businesses,” the studio said in a statement.

    The options offered to kiosk vendors will include a 28-day window, while mail-order subscription customers will also have a day-and-date revenue-sharing option. Additionally, WHV has revised its wholesaler terms to prohibit the purchase and sale of WHV previously viewed product.

    The studios have been split in their treatment of the growing kiosk business, some imposing windows and other making deals. Leading kiosk operator Redbox this week filed suit against 20th Century Fox Home Entertainment over the studio’s decision to impose a 30-day delay on making its new DVD releases available to the rental kiosk company, becoming the second studio targeted by the kiosk company in a lawsuit. Universal Studios Home Entertainment last year was sued after withholding its new DVD releases from Redbox for 45 days. On the other side of the studio spectrum, Sony Pictures Home Entertainment last month and Lionsgate this week entered into multiyear deals with Redbox.

    Chuck Berger, chairman and CEO of kiosk company DVDPlay, said the studios are standing in the way of a “tsunami of technology.”

    “The consumer has made a very clear choice for convenience, and the ability to rent a DVD from locations they visit several times a week, for an affordable price,” he said. “All these actions by the studios seem reminiscent of their decade-long resistance to the Internet as a legitimate distribution channel.

    “We and Redbox and NCR [TNR, MovieCube and Blockbuster kiosks] will adapt to this as we already have with Universal. They’re not keeping titles out of the kiosks.”

    THIS COULD SPELL DOOM!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

  10. Visitor [Join Now]
    JackTheRedBoxRipper [visitor]

    Simple…. 3-5 DVDs at a time x $1 each + Large Hard Drives + discipline to rip dvds in one night = $60-$100 in movies each time

    • Member [Join Now]

      dont even need that.. my uncle few years back got a Dvd dubber thing (little plastic box that i can hook from a dvd to vcr (or another dvd)

      4 new release movies @ 15 each 60..
      4 new release movies @ 1.00 each + 1.29 vhs tape to hold all 4movies…. 5.29 and they will have a copy of each movie …..

      though the copy box thing cost them 179 bucks when they got it 4 years ago.. and cant really remember the last time they used it… (when they first got it and they had netflix then were flipping movies daily lol)

  11. Member [Join Now]
    Fred [fredmovie]

    At issue here are several legal points. Under existing antitrust laws (eg Sherman Act as a starting point) a supplier must offer similiar terms of sale to similar customers. While I’m not specialized in antitrust law, I believe that only the purchase transaction would be considered. Specifically, how or even what the customer does with the goods purchased are not considered but rather things like quantities, time of deliver, credit history or finanical terms are the only factors. One fine point is that a supplier may choose who it sells to and while this has already proven to upheld, its very risky and means a yes or no that must be applied consistantly. A good example is the delay from theatrical relase to DVD release.

    The motovation for Fox, Universal et al is their fear of the errosion of the value of their movies. Their worst nightmare is that the masses stop paying $10-15 per person to go to the theater. Kiosks represent a value errosion. This is what they really fear.

    Irregardless of what Fox et al think, one only needs to look at the companies inivolved. Blockbuster stock peaked in mid 2002 just shy of $30/share. Today they are trading < $0.75. The vast majority of competitors are already gone and in Jan predictions for the year Blockbuster was one the 10 most likey companies to not survive 2009. So much for retail rentals.

    Internet/mail movie businessed like Netflix and others delivered the fatal blow to the store front model. While Blockbuster scrambled to respond they have failed to recover from this intial wound. Now with kiosks on the landscape the market will get divided between customers who want supreme convenience and those who seek lowest cost. VBG is an attempt to plead the case for independant store operators using the same obsolete store front business model but it won't change the outcome. The customers have spoken loud and clear with their wallets.

    One more additional thought. I would think Redbox would force Fox et al to explain the difference between them and Netflix. For a customer renting 3 movies at time and cycling them rapidly I would think you could pretty easily arrive at a cost roughly equal to the $1/night per movie. So how is a kiosk model different than mail?

    • Visitor [Join Now]
      Daniel [visitor]

      first off these studios are dumb, but the big difference between netflix and kiosk is that while any good flipper could get close to 30 movies a month on the 3 at a times netflix most netflixers aren’t movie flippers and only get a hand full of rentals a month, so it makes more money per rental on average. but the main reason for this 30 day thing is to try to get people to buy versus rent cause they know if they take away the cheap rental they might encourage more sales. But that is so wrong the reason sales are slumping is cause most new movies suck, and we are just seeing a giant rehash of what happened 10 years ago when the music industry was blaming the downloaders for decreased sales, when really people stopped buying cause the music sucked. Go REDBOX don’t buckle to the dumb studios.

    • Visitor [Join Now]
      Quickeyepi [visitor]

      Very Good Fred