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August 14, 2009

Are Redbox DVD rentals too cheap?

Posted: 10:15 AM ET

Redbox operates DVD rental kiosks at over 15,000 retail locations across the country. The automated self-service systems hold over 600 DVDs and allow customers to pick up movies for only $1 per day.

The kiosks are gaining popularity, but their price and ease of use aren't winning over everyone. 20th Century Fox and Universal Studios have ordered wholesalers not to sell newly released DVDs to the rental company.

In a conference call with the Los Angeles Times, News Corp COO Chase Carey criticized the low-priced kiosks. "Having our [movies] rented at $1 in the rental window is grossly undervaluing our products," Carey said. "We are actively determining how to deal with it."

Unlike Blockbuster and Netflix, Redbox does not share profits from rentals with the major movie studios. But why should they?

The rental kiosks do not violate copyright law since they legally purchase the DVDs, and any form of unnecessary profit-sharing would certainly raise prices for consumers.

Upset by Redbox's success, Fox and Universal are leaning on wholesalers who distribute their DVDs to cut ties with the rental company. Redbox has responded by suing the studios for anti-competitive practices and abusing copyright law.

According to Ars Technica:

Redbox said that "Fox seeks to strangle" the low-priced rental market in order to maintain its own "artificially high" pricing scheme.

Meanwhile, Redbox plans to continue offering new releases from all studios, even if it means employees have to buy the DVDs at retail price the old-fashioned way.

Do you think the criticism of Redbox's pricing is justified? Should Redbox share profits with the major movie studios in exchange for new releases, or should the company remain independent?

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Filed under: Movies • technology

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Fred   August 16th, 2009 7:28 pm ET

The movie companies are obviously trying to screw Redbox. They've done this with every new technology that came out. I remember when the MPAA tried to have the record feature of VCR's banned, claiming that taping movies that were broadcast on TV somehow violated their copyrights.

What I can't understand why anyone would rent DVD's instead of buying them.

I can but a new-release movie that I know I like for around $15, and watch it free of charge, for the rest of my life. $15/20-40 years comes out to $.002 to $.004 per day – less than a penny. And I can watch them again any time I want to – no spending gas to drive to the store, or waiting for something to show up in the mail.

And for the rest (99%) of the movies, just about every retail store has a 'dump bin' with DVD's clearance priced, usually around $5. I just look through those when I'm in the store and grab a movie or two if I find anything that looks interesting. I've found some pretty good films that way that I hadn't noticed when they came out. For the one or two a year that I pick-up that I can't stand, I usually find a friend who's interested that I can give it away too.

Either way, it's cheaper than a movie ticket with popcorn. I go to the theater now maybe once a year. And I have probably a few hundred movies at home now that I can watch, instead of just one or two.

Zain   August 16th, 2009 7:56 pm ET

Redbox is awsome. The movie industries should have thought about this when they made their copy right laws. They can't control the rules, Redbox is legal and they should fight to maintain their business. The movie industry already makes enough money.

Roseanne Rosannadana   August 16th, 2009 9:13 pm ET

I am outraged! This is one of the most ridiculous things I have ever heard. Why on earth would Fox want to stifle the Red Sox? I mean, I can understand if you're a Yankees fan that you wouldn't want the Red Sox to win, but shouldn't Fox Sports broadcast Red Sox games as well? The Red Sox are as good a team as the Yankees. Yes, the Yankees beat them four straight games a couple of weeks ago, but don't forget, the Red Sox beat the Yankees eight times in the first half of the year. Yes, we know the Yankees have some loyal and rabid fans. But the Red Sox do too! And they deserve to see their games broadcast on television as well. Fox, don't stifle the Red Sox.

What? Redbox? Oh. Nevermind.

Richard   August 16th, 2009 10:25 pm ET

The MPAA and the RIAA still don't get it do they?

Sean Robert Meaney   August 17th, 2009 3:01 am ET

We so need red box DVD rentals to open in Australia.

We only get $1 Tuesday. $1 dollar every day would kick arse and kill competition.

s   August 17th, 2009 3:53 am ET

I love how movie and music companies are trying to sue or restrict people left and right. Every time i see a company like fox or a music label try to sue or screw an innocent person i quit buying their products. HIT THEM WHERE IT HURTS THEIR OVERSIZED WALLETS

ICE   August 17th, 2009 5:34 am ET

I say we boycot all blockbuster and netflix and just rent from redbox. It just sounds like the movie industry is trying to act like the mafia and hustle redbox for a piece of their profits.

scott   August 17th, 2009 6:59 am ET

i absolutely hate red box. nothing aggrivates me more than having to politely wait on some schmuck who is taking 30 mins to pick out one of the usually pretty lame b grade horror flicks the kiosk has to offer

Li Tai Fang   August 17th, 2009 7:12 am ET

I am firmly on the side of RedBox.
Those movie studios, along with Apple, shall all perish due to their abuse of copyright and anti-consumer behaviors.

scgil   August 17th, 2009 8:35 am ET

Go RedBox! Go RedBoz! GO! As you can see, nothing disgusts the consumer more than a company and/or industry trying to fatten it's pockets when their pockets are already busting at the seams!


Brian Dang   August 17th, 2009 8:39 am ET

Although I don't personally use Redbox but I think it's a cheap alternative compare to BB and the like. Why would they pay a penny to the big productions? They're the one who come up with this idea. These hollywood big players just want a piece of the pie – a piece that they don't deserve – all because of one word "GREED".

Mark   August 17th, 2009 8:43 am ET

I am on Redbox's side on this. Have used them only a couple of times but it was very convenient. Good business model.

I do wonder though.... if Redbox does not have any kind of deal with the distributors/movie studios and just buys the dvds wholesale, how is that not breaking copyright law? I thought charging for the viewing of a privately owned movie was illegal? I'm no lawyer, so I don't know. Someone enlighten, please.

totoy tigas   August 17th, 2009 10:01 am ET

to film studios(if you even listen): a way to help consumers & your profitability: compete with Redbox - since you already own the movies - exclusive Universal or Fox $1 DVD kiosks ? It takes millions to make a movie, why not start with a few kiosks. It took a YEAR for Redbox to expand from New York/Washington/Virginia to Florida, I know, we(senior citizens) had to wait that LONG for them (phone calls, online follow up, etc).

More kiosks: less aggravation from slow users. More customer traffic for supermarkets where the kiosks are. (I'll return these DVDs, oh I need some milk, eggs, those jeans look cool..). Summum bonum.

Read previous posts - Canadians & Australians want these kiosks. Are you guys in business to fight demand ? Wake-up, Disney is already into it.

Karen   August 17th, 2009 3:51 pm ET

I love Redbox...even if I forget to return a movie for a few days, I still get the movie cheaper than if I rented from BB or some other high-priced movie-rental retailer. The concept is pure's convenient; there are Redboxes ALL OVER the place! If one is too crowded (which rarely happens at the locations I use), I can just go a couple of blocks in either direction and there's my choice of Target, Giant or Shoppers where I can rent/return. Once I forgot to return movie just before I left for a long road trip from D.C. to Georgia- no problem, I just stopped at Wal-Mart in North Carolina and dropped in the box.

Rich   August 18th, 2009 7:53 am ET

Redbox has bent the rules to spin a profit – since they are undervaluing the product, it needs to change.

People need to get a grip – if you think renting a movie for $3 is unfair, then you are way out of line. $1 is ridiculous and over time, this devaluing will hurt the movies we see. Man up, pay for your entertainment, stop trying to play the victim. This is an optional entertainment product, not a core part of your life – GET A GRIP.

Hmm   August 18th, 2009 5:57 pm ET

I wonder how much taxpayer stimulus and bailout money is supporting the movie industries attacks on redbox.. You all do know that taxpayers subsidize the movie industry and pay celebrity salaries right? Just ask your local congressman, or take the time to read some of the legislation that your local congressman does not bother to read.

Rob   August 18th, 2009 7:13 pm ET

@Ann (sic) Rand:

Capitalism is of benefits to the consumer? Tell that to Standard Oil, Ma Bell, Blue Cross/Shield...

Can it breed innovation? Yes. It is in no way an unmitigated benefit to consumers and only the foolish suggest otherwise.

Sean   August 19th, 2009 7:12 am ET

With a wife and three boys on a modest single family income, I don’t go to the movies. A trip to the movies can easily cost me $60. We rent from Redbox. If we really like a movie THEN we purchase it for my kids to be able to watch again. If the studios force redbox to raise the process, then I will just have to stop renting altogether. My family and I enjoy the movies, but make no mistake – we do not NEED the movies to be entertained.

dude   August 19th, 2009 11:03 am ET

stop paying brad pitt 20 million a movie and maybe the studios
would make more money.
Or any overpaid actor!

Dave W   August 19th, 2009 2:43 pm ET

So What? I won't stop going to Redbox, I'll just stop renting Fox movies,if they are not there.

Tony   August 19th, 2009 2:49 pm ET

These media companies are a bunch of greedy control freaks. The whole issue is control. The movie studios (and music companies as well), unlike most every other industry on the planet, seeks to control their product even after they have sold it to the consumer. If you purchase a car, a television, a can of soda or any other product on the market, the seller's control over that product ends the moment you complete that transaction. If I buy a new car it's mine. I can get a new stereo, new wheels, modify the engine or drive it off a cliff. There is nothing that the manufacturer can do about it. If I decide to rent that car out, again, nothing they can do. But media companies are greedy. They want control of their product far beyond what most people consider reasonable. They don't understand the concept of ownership as most logical people do. Redbox paid for the disks they rent, therefore the studios were compensated for their product. If they want more money then they should raise the price of their product. But piggy-backing off of someone else's efforts to make a few extra pennies is ridiculous.

Tony   August 19th, 2009 3:10 pm ET

In response to Ann Rand, pure capitalism is a failure and doesn't exist. Every industry that ever existed at some point is regulated, usually with good reason. There are numerous examples of this throughout the history of mankind. Capitalism without some manner of checks and balances has proven to be unsustainable.

Anthony   August 23rd, 2009 10:58 pm ET

Those media companies will never be happy until they can rip everyone off. I dont like paying $5 for a crappy movie (which is all hollywood has been putting out) so losing $1 isnt so bad. I enjoy the redbox rentals but if the price goes up even $1 ill quit renting there simply because the media nazis got their way.

Shawn   August 25th, 2009 12:34 am ET

If the movie industry wants to compete with Redbox, they need to *gasp* LOWER the prices of their movies. It's ridiculous to pay 15-20 dollars on a movie that costs them pennies to make. Lower the price to 5 dollars on movies, and people will be more willing to go buy copies for themselves rather than pay a dollar to rent for a day.

wordz2impress   August 25th, 2009 8:12 am ET

Use NetFlix people, you'll never go back.

J Huff   August 26th, 2009 10:15 am ET

Redbox is not "cheap" overall and is no threat to Fox! It's all about their greed, not their pride in the dedication to their craft (as suggested in their recent statement). Netflix is per month, redbox is per day. $1 per day rental = $28 approximately per month, far more expensive than netflix! Especially if one keeps the movie for longer. It is simply a more cost effective option for people who can't afford to commit to a monthly agreement or who need an extra instant movie. They are also 24 hours, which no rental stores are.

In addition, I have often purchased a DVD after watching it via a rental service including redbox. If Fox don't stop their greedy nonsense, maybe I will boycott purchasing their movies because I am sick of the constant whine of musicians and film makers who appear to forget that it is not the studios who make them rich and famous, it is we the people who keep getting blamed for ripping them off!

Bammer   September 23rd, 2009 12:15 am ET

Maybe the studios should try making DVDs that your have to pay for each time you watch it till you spend enough to "buy" it at their price?
Oh yea thats right, they tried that once and it FAILED! a la Divx

Mike A   January 25th, 2010 9:48 pm ET

I think redbox is a hell of a deal.I am on a fixed income and it is wonderful to rent a movie for a buck.These big companys do not care about you and me as long as they make lots of money.You are great redbox do not cave in to the pressure.Oh I am an old man so I know a good deal and you damn few of them these days.

Betty C   March 3rd, 2010 1:08 pm ET

Following the logic that DVDs are only for private viewing then Blockbuster and Hollywood video are also renting them illegally. What they do with it after they make the purchase should be up to them. I say hooray for Redbox. They came up with a great innovative idea.

Haxed News » Paramount green-lights brand-new DVDs, Blu-rays on Redbox   June 17th, 2010 5:01 pm ET

[...] were adamant that Redbox's $1-a-night rental prices were chomping into their DVD sales, with a top News Corp exec accusing Redbox of "grossly undervaluing our products" by renting new movies for only a buck a [...]

Paramount green-lights brand-new DVDs, Blu-rays on Redbox (Ben Patterson) | NewsMunch   June 17th, 2010 7:54 pm ET

[...] were adamant that Redbox's $1-a-night rental prices were chomping into their DVD sales, with a top News Corp exec accusing Redbox of "grossly undervaluing our products" by renting new movies for only a buck a [...]

Paramount-grüne Lichter nagelneue DVDs, Blu-rays auf Redbox (Ben Patterson) « News Blog   June 23rd, 2010 8:04 am ET

[...] Top News Corp exec beschuldigen Redbox [...]

tbonetedh   June 23rd, 2010 8:57 pm ET

with hollywood video going away and blockbuster on the rocks... i see that the red boxes have raised their rate in my community, (Yakima, WA) by 15 percent... to 1.15 per night... LOL eliminate the competition, raise the rates??

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dvdsl   September 17th, 2010 4:58 pm ET

There's nothing better IMO than getting a netflix dvd in the mail on Friday and watching it with the family on Saturday night after a great meal... love it!

Kiosk users: Would you pay more than $1 a night for the latest DVDs? (Ben Patterson) | Webmaster Central   October 11th, 2010 2:38 am ET

[...] big studios are worried that the sight of their latest movies in buck-a-night rental kiosks will "devalue" their movies and further cut into their dwindling DVD revenue, and they’re hoping that home-video fanatics [...]

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Justin   March 14th, 2011 8:08 pm ET

Redbox is losing each of its lawsuits. At the end of the day, if you take someone else's product and distribute it in a way that hurts their profits, something has got to give. Redbox tried to sue the studios, and turns out they had no legal ground at all.

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