Redbox looking into video game rentals as the movie studios cut them off at every turn
Video kiosk company Redbox is exploring the possibilities of adding video games to its product mix in the wake of video companies cutting off its supply of the newest releases.
The popular Redbox video kiosk company, owned by kiosk company Coinstar, has been fighting a legal battle with Universal Studios Home Video, 20th Century Fox Home Entertainment and Warner Home Video over being able to offer the newest releases on DVD. The three companies have stated that the company can no longer offer new releases for the first 30 days after release for fear that the $1 rentals are cutting into retail sales of those movies. While the argument has now gone to the courts, Redbox has tried to get creative by buying the movies from retail chains Best Buy, Target and Walmart.
According to Video Business, 20th Century Fox Home Entertainment and Warner Home Video anticipated that move.
Redbox has amended its court case to state that all three major retail chains have informed the company that it may not purchase more than three copies of any DVD under orders from the two movie studios. The studios are reviewing the legal documents, but are saying that they are within their legal rights to do so. Redbox is countering that it makes no sense for a retailer to deny such large sales unless all of them know that the others will abide by the requests from the studios.
In the meantime, Reuters reveals that Redbox has begun discussions with video game developers about adding their games to the kiosks. Tests are already being run in Reno, Nevada, and Wilmington, North Carolina, with a price point of $2 per night. Brian Farrell, CEO of video game maker THQ Inc, told Reuters, “If you look at movies and music in some ways, resisting new business models has not been a great formula for success, so one of the things I like about our industry is we tend to think, ‘We have to adapt to this change.’ So it’s part of our DNA.”
Mitch Lowe, president of Redbox said that the company is trying to make sure everything is clear from the start with the video game companies. ”We are talking early and often with the content providers of games so that we start out with a much better understanding of what we’re doing.”
Either way, there looks to be a long road ahead for Redbox in the courts and in trying to expand its business. What the final resolutions will be is anyone’s guess.
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January 22nd, 2011
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