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It has been a few weeks since the court decided to allow the Redbox lawsuit against Universal to go forward. While Universal and their friends have claimed victory in the dismissal of two of Redbox’s claims, the claim that remains on the table is based on one word the studios don’t want to hear: antitrust.

The question is: Does the antitrust complaint have any merit, and does Redbox have any chance of successfully prosecuting this claim?

I am sure there has been lengthy discussion on both sides around this issue, and my guess is that Universal (and all other studios) don’t think a loss on this issue is worth the risk. So what will they do?

Make a deal, of course.

In an AP report, analyst Eric Wold with Merriman Curhan Ford agrees with this, believing that a deal with Universal may be imminent.

Universal may come around too, he said. Redbox has sued Universal, a subsidiary of General Electric Co., over the kiosk business, but Wold said it is in the studio’s “best interest to return to the table and negotiate a distribution deal.”

Now that a judge has allowed Redbox’s suit to go forward, clearing the way for a possible trial, Wold said Universal’s best bet is to avoid “potentially losing an antitrust claim.”

While Wold’s analysis is far from definitive, I think the reality is pretty clear cut. If Universal takes the risk and lets this go through the courts, and Redbox’s antitrust claim is upheld, that means a serious loss for not only Universal, but all of the studios. And, while I am sure the studios would like nothing better than to give Redbox “the finger” here, is it worth the risk?

Time will tell what Universal and the other studios are thinking here, and perhaps they have something else up their sleeve. But, barring that, it looks like we may hear an announcement sooner rather than later about an agreement being reached in this case. And if so, it is definitely Redbox FTW.

What do you think? Will Universal (and thus all of the studios) be willing to take the risk of losing this claim, or will they make a deal before it’s too late? Let us know in the comments.

[AP via SFExaminer]

34 Responses to “Universal’s Bluff with Redbox About to Fall Apart?”

  1. Visitor [Join Now]
    Jim [visitor]

    In my opinion, I don’t think there is, under any circumstances, any reason to believe that universal will settle their dispute with Coinstar (Redbox) before trial. This has been ongoing since December 2008.

    Should this go to trial, and by some way Universal should lose, all they would have to do is revert to the old standard of distribution in the VHS days, whereby a window will be set for ALL rental companies for a period of time before be offered for sale to the general public & Rental companies will be charged a lot more per copy.

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

      Sure dosn’t sound like Universal is backing down what so ever. They Just filed there response to red box’s complaint yesterday.

      In an Aug. 31 answer to Redbox’s amended complaint against Universal Studios Home Entertainment, the studio denies that Redbox is entitled to Universal DVDs from distributors VPD and Ingram and denies that it has engaged in any type of DVD retailer blockade against the $1-a-night DVD rental kiosk operator.

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

    The whole antitrust part of this lawsuit (in my opinion) will never come to fruition for redbox and the whole reason I say that is based on Mitch Lowes own words about how he has very publicly said that redbox has a very functional work-around to get these titles so where is the antitrust? Also the only part of the lawsuit allowed to go forward was the part where it basically states that universal was in collusion with others to prevent redbox from receiving it’s titles and that would be extremely hard to prove given that redbox can go out to any retail outlet like they have been doing and get them like they’ve publically stated also Universal did not collude with any other studio because they were all still dealing with redbox at the time of the lawsuit. Universal can deal with anybody they should so choose and as far as redbox’s contracts with Ingram or VPD– Universal is not bound to them in anyway. THE ONLY REASON I could ever see Universal settling would be the fact that paramount signed a contract that almost has the same stipulations that redbox was looking for minus the 45 day rental window. To be honest even if Universal did settle and sign a contract with RB the contracts that are being signed are so favorable to the studios I believe it’s the only reason why any one of them has signed them it’s not because they are in favor of redbox’s business model it’s because I think all the studios are together on there feelings about how redbox is destroying the video industry and either way by signing a contract or opting for litigation it’s the same side of the coin either way in the end they’ll be forcing redbox to change there business model.

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

    I think that red box has a good feeling that they will lose what’s left of this case which is why they are doing the big publicity blitz on how they are trying to save low cost DVD’s. I think they are trying to win in the court of public opinion because they don’t feel they will prevail in court. I think the only bluff in any of this is red box’s lawsuits against the studios.

    • Visitor [Join Now]
      Sony? [visitor]
      I work with VBG. To find out why this is important, click here.

      Why didn’t VPD or Ingram Sue the Studios?

      That’s my question.

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

        For what. Universal doesn’t have to supply them (Ingram & VPD) if they so choose just like red box. Not only that but to both Ingram and VPD red box is there biggest client and yet both distributors would rather loose there biggest account rather then to allow redbox to continue to devalue DVD’s like they have been that speaks volumes to what is happening out there, who would rather lose there biggest account if they didn’t have to? Overall they get alot of sales from Redbox but by continueing to allow the distruction of the Video Industry it would hurt them more in the long run. I think both distributors are rooting for the studios to prevail so they are allowed to continue distributing to them but with different terms in place where they could still keep the value of DVD’s.

        • Visitor [Join Now]
          Sony? [visitor]
          I work with VBG. To find out why this is important, click here.

          I see your point, but if this is an Antitrust case and if it were a slam dunk for RB you would think that these suppliers would be the first to rake in the money in a lawsuit.

          Since Ingram and VPD did nothing it speaks volumes of what they think is “Valid”.

        • Visitor [Join Now]
          FalconFour [visitor]

          If the studios have such a problem with DVDs being “devalued” by Redbox, then WHY THE HELL DO THEY CHARGE SUCH LOW PRICES FOR THEM?! If they want Redbox to charge more for DVDs… charge more for DVDs themselves. How is that so difficult to understand? If their business model is so broken that they rely exclusively on price-fixing in order to make their products valuable… then god damn, something is very wrong. How can you not see that?

          • Visitor [Join Now]
            Sony? [visitor]
            I work with VBG. To find out why this is important, click here.

            What price fixing are you speaking of?

            Sorry, I do not see your point.

          • Visitor [Join Now]
            pinpoint [visitor]

            His point is that the studios are out there dropping the proces of titles a week after street date at select retailers to $9.99 and $7.99.

            It’s pretty hard to justify this idea of “maintaining perceived value” of the dvd’s when they slash the prices themselves. Also, Fox was more than willing to let the DVDs rent for $1 a night as long as they got pretty much every penny of it it seems….I guess the perceived value of the disc isn’t THAT important now is it?

          • Visitor [Join Now]
            Sony? [visitor]
            I work with VBG. To find out why this is important, click here.

            $7.99 after one week?

            What am I missing?

            If a retailer is doing that, they are obviously doing it as a loss leader.

            Personally, I haven’t seen that happening.

            I’ve heard about 1 or 2 titles being sold for the $10 after a week at Wally with some studio promos, but that isn’t that wide spread.

            Yes perceived value has been hurt by the Big Box Retailer and RB.

            RB gives millions of freebies a day and the Wallyworlds of the world sell the movies at a loss the first week and, on a few occasions, even $10 on week 2.

            DVD prices have maintained the same price for 10 years.
            Inflation has happened in the past 10 years, yet you can rent for 1/3 or 1/5 the price you did 5-10 years ago.

            Effectively you are renting a movie, when you actually pay for it, for about $0.60/day 10 years ago.

            The need to give away the farm with the freebies to drive up market share is the biggest issue with me.

            If you have such a great product at 1/3 to 1/5 the price, why do you have to give the product away with such frequency? This is why most customers are enthusiastic about RB and are blinded by the negative impact that it is having on the industry as a whole. Physical media being free or for a $1 in hamstringing Digital Innovation.

            Related Example. At McDonalds the $1 menu is pretty popular. Now imagine if they came up with a box that gave away $1 menu food as freebies with the frequency that RB gives movies. What impact would that have on the rest of the “Food” industry? Yeah, it would be very popular, some would even find ways around the codes to have a complete meal.

            Could these machines eventually Net income of $100 to $300/month if they added a few premium items. It would take 10 to 20 thousand machines to make millions. But at what cost to the industry? You would have every other food related business up in arms and there would definitely be far fewer options to eat at.

          • Visitor [Join Now]
            pinpoint [visitor]

            Good points Sony?….however the one thing you may have missed is that, especially based on all the posts (or lack of anymore) about the subject I don’t think redbox is giving away any freebies anymore. There are store-related promotions where the retailer is offering a free rental to help them move some item but all I see here now is people complaining because they don’t get free codes anymore. I for one have NEVER used a free code. I rent at RB for one reason…convenience. It fits my hectic life and I imagine it does the same for others. It sounds silly but if I will choose one option over the other even if it just means I don’t have to make a left turn into traffic as opposed to a right. I think there are a lot of smart people here with good theories , studios included, who are either afraid to accept or refuse to accept that this wave is more led by societal changes than price. Price is huge..dont get me wrong….but I think sometimes the answers are a lot simpler than bigwigs want to believe.

          • Visitor [Join Now]
            Sony? [visitor]

            Convenience is great.

            I pay $2.49 to $2.99 most of the time at my local store. I figure I save at least 20 minutes vs. going to Redbox and my time is way more valuable to me. I hate lines and time is money. Even if the line is short to rent I’m usually not going to risk the unknown when I’m going to return.

            There is a spot for Redbox, but the freebies have already done their damage to the industry.

          • Visitor [Join Now]
            Carson [visitor]

            No lines in the morning… I’m not sure why people wait until Fri or Sat night to rent movies, I wouldn’t even step foot in a video store at that time.

          • Visitor [Join Now]
            pinpoint [visitor]

            SOny? I have to disagree. I have been around this industry for a long time and have run video stores. It’s always something out there. What ruined this industry happened a long time ago when the studios got into bed with BBV and started copy depth. That was about nothing more than pure greed. BBV wanted to kill everyone else by GUARANTEED IN STOCK. Suddenly the consumer became used to getting MOVIE A whenever they wanted…no matter what. The studios were getting $65+ for every VHS tape and making extra when a “sell thru” title was released. But they wanted MORE…and they did everything they could to make sure BBV got every advantage. And you know what happened? They lost their asses with bad deals and overdoing it. They completely changed the perceived value of a movie by making it TOO available. Renting a movie went from being special to being no different than grabbing a loaf of bread. A consumer was shocked if it wasn’t there. Businesses have always tried to stay ahead. Even the innocent little mom and pop has stayed afloat by renting their movies on the Friday before street date…yeah you heard it…they break the law every single Friday and I know they all still do it. They prop up their porn sections too. Trust me if you have any doubt. I was there…LOL
            So you are a prime example of someone who rents where you do based on convenience. EVERY good business will tell you it’s about one thing first and foremost to attract people..LOCATION LOCATION LOCATION.
            The studios arent mad that redbox is devaluing anything…they are mad because they didnt think of it first.

          • Visitor [Join Now]
            Sony? [visitor]
            I work with VBG. To find out why this is important, click here.

            Pinpoint, you went from agreeing to disagreeing?

            Not every Mom and Pop shop breaks street date, nor do they all have porn.

            “Trust Me”, i rent on Fridays(no street date violations), no back room or propped up porn either.

            You are very accurate on the fact that the Studios made renting no different than buying a loaf of bread.

            The problem is RB priced their “Bread” like it was stale, day old bread(with a shiny Red Wrapper) and that giving away this “Bread” would hamper every other “Bread” dealer that needed to make a profit.

            I do rent for convenience and the place I rent from has a far superior selection. I also know that the people running the store are very generous and offer way more to the Community and it’s not even close. RB has not donated a dime to the community, all the while this store offers 6 figure dollars in the form of taxes, donations and wages a year.

            The Studios didn’t think of it first(I couldn’t see them all agreeing to share a box anyway) and it does scare me a bit that they definitely hold all the cards when it comes to Digital Vs. Physical.

            However, that is moot since RB has hamstrung Digital with a Free to $1 price point. A price point where only the studios would have to come together to eliminate all the middlemen.

          • Visitor [Join Now]
            pinpoint [visitor]

            I really do get the vibe that you’re feeling. But you are more than willing to pay the extra buck or two when you rent because it’s convenient or because you like the business owners and what they stand for. It’s a noble thing to do and I appreciate it as well as a small business owner.
            I have just been around this kind of scene so many times before and have heard all the cries so many times before about so many different things that are evil or killing the business of dvd/vhs. I just have to believe that if anything positive comes out of this, it will cause the studios and their executives to start thinking long-term better and starting to realize that they can’t keep fooling the consumer. They fleeced us all with the “sell thru” craze when people wasted thousands of dollars on movies that have never even been opened since they bought them. Maybe this is just the world balancing out a little…LOL

  4. Member [Join Now]
    Dayna Sue [dayna-sue]

    Has anyone felt the decline in redbox variety,customer service, or overall quality of how things are handled at redbox? I live in Reno NV and for 3 weeks I have not been unable to reserve a movie online because the kiosks are not able to communicate with an online reservation, ever since they put in game rentals and a new system. I have emailed and called customer service and it takes 3-5 days for a generic response that doesn’t answer my question. The telephone call is much too lengthy. Driving directly to a redbox location is frustrating since there are about 1/3 the amount of movies to choose from and not all machines are working. It was fun to get a free rental code, it made you feel special, but I do not get those anymore. When there is such a decline in any buisness to recieve good customer service, it felt good to start with redbox and feel good about being a customer, but sorry to say, I will pay the extra money to go elsewhere now.

    • Visitor [Join Now]
      Sean [visitor]

      I hate those generic responses. I’ve still been able to reserve online, but customer service has definately gone downhill. And where are those damn codes?????? They are non-existent anymore.

      If redbox hopes to even win in the court of public opinion, they better fix these things.

      • Visitor [Join Now]
        Carson [visitor]

        I KNOW!!
        Dern you Redbox, unless you start giving out free codes again, I’m not going to rent anymore! then you will be stuck renting to only paying customers, because I’VE HAD IT!!!

        • Visitor [Join Now]
          Sean [visitor]

          I was speaking more about the customer service issue, but thank you for your completely unhelpful smartass remarks.

        • Visitor [Join Now]
          Sean [visitor]

          F.Y.I. I AM a paying customer. I rent around four movies a week through redbox. Just because I took advantage of codes, that THEY offered does NOT make me some sort of freeloader.

          • Visitor [Join Now]
            Carson [visitor]

            I’m a freeloader and proud!!!
            When they stop with the free codes, I’ll have to go back to doing free Netflix trials over and over again.

          • Visitor [Join Now]
            Just curious [visitor]

            Sean, just curious…. What 4 movies did you find worth (even $1 each) renting this past week at Redbox, or the weeks before at Redbox?

          • Visitor [Join Now]
            Sean [visitor]

            Well Just Curious, I actually haven’t rented any movies yet this week, because I’ve got recorded shows that I had to watch. I only plan on getting State of Play this week though. Last week I got Fighting, Duplicity, Adventureland, and Sunshine Cleaning. Exactly four I guess. I think the week before that I only got Last House on the Left and Education of Charlie Banks. But I got an older one too, Cake Eaters. I can’t remember everything I’ve rented in the past month or two, I rent so many movies.

    • Member [Join Now]
      Shemp Howard [shemp-howard]

      Hi Dayna Sue

      Many have voiced similar concerns. In short, the honeymoon is over.

      Each month there are fewer and fewer: promo codes; non-direct to DVD and never released or reviewed titles. As many of the posts for the last few months have indicated, there is the ongoing legal equivalent of war, regarding anti-trust issues between rental kiosks and just about everyone else.

      Redbox is a business and financial expectations only come at renter’s expense– as your post clearly states.

      Everyone hopes that over the next few weeks conditions will stabilize and at least the logistic and administrative issues you mentioned will make it easier for on-line reservations and there won’t be a need to deal with customer service.

      • Visitor [Join Now]
        John Las Vegas [visitor]

        Wishful thinking.

        • Member [Join Now]
          John Las Vegas [john-las-vegas]

          Once again some idiot using someone else’s name. And for what purpose? This is why the main page was removed and why there should be required log ins to post!

          • Visitor [Join Now]
            John Las Vegas [visitor]

            Just ignore the last post, again this was NOT me. I don’t know why this jerk keep taking my nick, and NO, my name is NOT Nick, so please, don’t ask.

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

    Sure dosn’t sound like Universal is backing down what so ever. They Just filed there response to red box’s complaint yesterday.

    In an Aug. 31 answer to Redbox’s amended complaint against Universal Studios Home Entertainment, the studio denies that Redbox is entitled to Universal DVDs from distributors VPD and Ingram and denies that it has engaged in any type of DVD retailer blockade against the $1-a-night DVD rental kiosk operator.

  6. Visitor [Join Now]
    c2nah777 [visitor]

    Less titles than in the past. I sometimes go a week without renting any. I pay and I use codes when available. I don’t feel like RB is obligated to give me freebies. I ditched BB in favor of RB a year ago. Saved lots doing so. Now I may need an alternative to suplement the selection. Hopefully this litigation will result in the studios opening up their pipelines to RB.
    I like to see two good movies released per week but sometimes see three or four and some weeks none. The congestion is getting worse due to popularity, but with reservations it cuts selection time to zero at least, and I know a title is gonna be there.

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

    I see the studios aren’t the only ones screaming about the effects red box is having on the industry

    Redbox’s $1 rental model could curb VOD market
    PHYSICAL: SNL Kagen: VOD companies must stay at higher pricing
    By Susanne Ault — Video Business, 9/3/2009
    SEPT. 3 | PHYSICAL: Redbox’s $1 a night rental model, already perplexing to many studios for hurting sales, also could curb the burgeoning video-on-demand market, according to SNL Kagan.

    The research firm questioned in a recent study whether VOD companies could afford to drop their typical $3.99 price to a more competitive $1 price point.

    SNL Kagan says that answer is no. VOD companies will have to stay at relatively higher pricing to make their business models make sense. That could leave them potentially vulnerable to Redbox’s extreme value proposition.

    At a $1 price tag, SNL Kagan determined that VOD distributors stand to make $0.08 to $0.19 per transaction, taking into account studios’ assumed 70% revenue cut. That would result in a loss on the transaction for VOD companies. However, a $3.99 price point consistently yields a profit for them.

    Studios also are unlikely to get on board with $1 VOD rentals, notes SNL Kagan.

    At that pricing, and assuming VOD was the only rental choice available, there would have to be more than 8 billion downloads to achieve the expected $8.03 billion in 2009 rental revenue. However, SNL Kagan projects there to be just 1.74 billion total rental turns in 2009.

    • Visitor [Join Now]
      pinpoint [visitor]

      …and I just read another analyst that sums it up well …rb is just the industry’s newest scapegoat. I’ll find the link for you all

  8. Visitor [Join Now]
    Jim [visitor]

    NEW CFO LASTS ONLY 3 MONTHS

    John Harvey, who was appointed chief financial officer of Coinstar Inc. just a few months ago, is quitting.

    Harvey previously was CFO of Coinstar subsidiary and DVD rental company Redbox, which is located in suburban Chicago. Bellevue-based Coinstar (NASDAQ: CSTR) said Harvey quit “because of the extensive time his position required for him to spend away from his family.” Coinstar said that he had been commuting between Bellevue and Chicago.

    “I’ve chosen to seek opportunities in the Chicago area that will allow me to spend more time with my family,” Harvey said in a statement.