In a show of industry disdain for cheap movie rentals, Fox has ordered wholesalers to wait 30 days before supplying DVDs to Redbox rental kiosks.
The action comes just before a court is expected to rule on the legality of such orders. After Universal imposed a similar delay on its wholesalers, Redbox sued the studio, and Universal counter-sued. A federal judge in Wilmington, Del., should have a ruling any day now. Unlike other studios, which are anxiously awaiting the ruling before taking action, Fox took the bold step of acting now, the Hollywood Reporter writes.
Redbox, which is operated by coin change machine company Coinstar, has become a rental phenomenon. By offering $1 per night DVD rentals from big-box and grocery stores, Redbox has undercut brick-and-mortar rental outlets. Blockbuster recently began experimenting with rental kiosks, and had to cut prices to stay competitive.
Cheap rental kiosks anger the movie studios, who feel that the kiosks are hurting their bottom line for new releases. Fox, like Universal, also imposed the delay on a smaller chain, MovieCube.
"We invest enormous money, creativity and effort to make entertaining, high-quality Fox movies available throughout the world," the studio said in a statement, adding that it wants to serve the consumer "on reasonable business terms for Fox as well as our distribution partners."
In other words, Fox is upset that there exists a market for cheap, short-duration movie rentals, because it'd like to be making more money. Given the studio's other attempts to save its bottom line by punishing the customer, I'm not surprised.
This is just my intuition, but I'm not sure a one-month delay on releasing to Redbox will cripple the service. The number of movies stocked in a given kiosk is far from exhaustive, which makes me think most people use the service because it's cheap and convenient, not because it has the best movies. As evidenced by Warner's program to destroy unwanted movies so they wouldn't be resold for less money, cheap seems to go a long way.
