An economic study recently released by the Los Angeles County Economic Development Corporation (LAEDC) claims that Redbox’s low cost new release rental model could have an enormously detrimental impact on the entertainment industry, as well as the economy of Southern California.
The study, available in its entirety here, is entitled “The Economic Implications of Low Cost DVD Rentals”. It states that Redbox’s $1 per night pricing model on street date new releases, “shows the ripple effect of $1 billion in lost revenues to the domestic home video industry in the Southern California region”. The study goes on to say that these lost revenues would translate into $500 million in reduced economic activity and the loss of more than 9,280 jobs in the industry. The (LAEDC) study summarizes its findings thus:
“In the event that new releases are available at Redbox kiosks at street date, there will be erosion of retail revenues. . . We estimate overall industry revenues of $1 billion or more will be foregone.”
Gregory Freeman, Vice President of Consulting and Economic Policy for the LAEDC, had the following to say about the study’s results:
“The economics of the motion picture industry are based on exclusive release windows which allow price differentiation – that is – some earlier transactions take place at higher price points. . . Redbox, or any other distributor that weakens the release window model, could reduce overall industry revenues. Lower revenues will likely lead to lower production activity, hurting the Southern California economy.”
Insiders, are the study’s findings preposterous or prescient? Leave a comment and let us know what you think.
[via Earth Times]