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Thursday, December 11, 2008

Universal: Let's Stamp Out $1 Movie Rentals

The Journal has a great piece today about Universal's campaign against Redbox, a company that operates 12,000 DVD rental kiosks in the US.

The basic issue is that while consumers love renting movies from the kiosks for $1, Universal feels that, A, the kiosks threaten important partners like Blockbuster Video, and, B, don't cut Universal in on a share of the rental revenue. (They just purchase the DVD, and that's it.)

From Sarah McBride's story:

    Blockbuster, which must rent and staff stores, might charge as much as $4.99 for the same rental. Last week, Blockbuster said it was testing renting some classic movies for 99 cents, because of factors such as the poor economy. It is also rolling out DVD kiosks of its own, starting with about 50 kiosks during the next few weeks at various retail locations such as convenience stores.

    Big retailers such as Blockbuster typically give studios a portion of rental revenue on top of purchasing the DVDs they rent out. But Redbox doesn't cut the studios in on rentals.

    ...In addition, studios claim that stuffing DVDs in kiosks may cheapen the underlying product. "The studios have been worried about the Redbox model from day one," says Tom Adams, president of Adams Media Research. As a studio, "Why would I help you build a business that charges a dollar for a product I'm trying to sell for $20?"

So let's recap: New technologies that make movies more accessible and affordable to consumers... Hollywood still hates 'em.

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