This story was written by Staci D. Kramer.
Add Twentieth Century Fox to the list of studios being sued by Redbox for imposing delays on new releases. The DVD vendor sued the studio Tuesday—the same day it announced a 5-year, estimated $158 million deal with Lionsgate. (Via Video.Business.com) Redbox is waving the consumer flag, saying it wants to protect consumers’ right to new releases. Life, liberty and the pursuit of the latest Ice Age.
The lawsuit, filed in U.S. District Court in Delaware, echoes an earlier one against Universal Studios Home Entertainment, which also is delaying release to the vending machine company. Redbox boasts more than 15,000 locations like McDonalds and Wal-Mart (NYSE: WMT) to rent for $1 with no late fees. While Lionsgate and Sony (NYSE: SNE) have signed on to full deals (Disney (NYSE: DIS) has some limits), some studios are more concerned by the potential Redbox has for eating into new-release DVD sales and, as Pali analyst Rich Greenfield suggests, “commoditizing” DVD prices.
Greenfield sees one key difference in the Fox suit compared with Universal. From his client note: One section in the Fox suit that was expanded compared to the Universal suit is that Redbox believes that the copyright misuse by Fox enables them to lawfully reproduce and sell copies of copyrighted DVDs without incurring liability (page 14, sec. 46 in the lawsuit above). A ‘war’ is clearly brewing”
And his take on what it may mean for the vendor: “The future of Redbox may actually depend on whether retailers such as Wal-Mart continue to believe that Redbox renting new-release DVDs is good for their overall business - meaning the return trip positive versus the negative impact on DVD sales (we suspect the return trip effect will fade as Redbox moves toward 30K kiosks with kiosks positioned outside convenience stores).”
By Staci D. Kramer