On the heels of a blockbuster distribution deal with Lions Gate Entertainment, the DVD-rental kiosk company Redbox has turned around and filed suit against 20th Century Fox for refusing to offer its new releases to Redbox for 30 days after they debut on DVD. Defiant in its language, Redbox accused Fox of denying consumers access to new release DVDs at an affordable rate.
“At the expense of consumers, 20th Century Fox is attempting to prohibit timely consumer access to its new release DVDs at Redbox retail locations nationwide,” the company said via press release. “Despite this attempt, Redbox will continue to provide our consumers access to all major new releases including 20th Century Fox titles at our more than 15,000 Redbox DVD rental locations.”
Redbox allows users to pre-select films they would like to see via the Web, then pick up that DVD at Redbox kiosks nationwide. After watching the film, customers can simply drop the DVD at any Redbox kiosk and pick up another film of their choosing. Through a remarkable inventory management system, Redbox is able to offer an inexpensive and convenient way for consumers to rent movies, with films costing just $1 per rental. But Hollywood studios see Redbox’s model as a threat to their DVD sales.
Fox’s new-release embargo is an attempt to create a window of time for retailers to sell the DVDs before consumers could grab them on the cheap from Redbox. Redbox, it would seem, isn’t having it. GE’s Universal Studios attempted to institute a similar grace period for its new releases last October, and Redbox filed suit as well. Universal countersued, and the outcome is still pending.
The deal with Lions Gate, announced yesterday, opens up that company’s extensive library to Redbox customers for at least five years, including new releases. Lions Gate representatives said the company doesn’t see Redbox as a threat to its traditional DVD business but rather as a conduit to get its titles out in front of movie fans when they are more likely to make impulse buys. Revenues from the deal are expected to fall between $200 and $300 million. Sony signed a similar deal weeks ago.