Sony Pictures, Redbox sign agreement

Redbox and Sony Pictures Home Entertainment both agreed to a multiyear distribution deal in which Sony DVDs will be available through Redbox rental kiosks found in grocery stores and shopping malls.

The agreement allows Redbox to to purchase movies directly from Sony, which means the company will be able to pay a lower cost for movies now and avoid wholesalers.

ADVERTISEMENT


Some movie studios have been cautious while dealing with Redbox, worried that the $1 per day rental may lead to an even further DVD sales decline. Lions Gate and Walt Disney have ended deals with Redbox, and believe the service is cannibalizing DVD sales across the U.S.  Adams Media Research indicates movie studio revenue will drop $850 million down to $12.9 billion in 2009.

However, the agreement between Sony and Redbox notes that, unlike other movies available from Redbox, Sony DVDs will not be available for sale through the kiosks.

Another reason some studios have turned down Redbox is because the rental company doesn't give a cut of rental revenue to the movie studios, while Netflix, Blockbuster and other rental services do.  Redbox ended 2008 with 12,000 rental kiosks across the U.S., but is expected to end 2009 with 20,000 kiosks.

ADVERTISEMENT

The Redbox service has grown in popularity as the convenience of renting movies for just $1.00 per day from a grocery store, Wal-Mart, Walgreens or a McDonald's restaurant has been more enticing than driving to Blockbuster to pay a higher fee.  Blockbuster Express kiosks, however, also recently dropped prices down to $1, after criticism of their $1.99 price point for the first rental night.

No posts to display