So why have some studios moved forward others have passed?
"It helps to book earnings now," said the executive. "If you can put these kinds of numbers in the current quarter, it helps the perception. Whether or not this business model survives is secondary to whether they can count the money today, and some want to count that money."
As for the studios that are holding out, Redbox's Lowe says this is nothing more than a form of blackmail.
"This is fundamentally about Redbox's right to pursue its business with its partners, but studios like 20th Century Fox, Warner Home Video and Universal Studios would like us to charge more to rent a movie," Lowe told TheWrap.
"We receive movies the same way as everyone else. We buy them at the same price. The difference is, we have developed an incredibly efficient distribution system and have decided to pass these savings to our customers.
Still, it's hard to argue with the fact that $1 rentals feel like they cheapen the glamour of the movies. What's more, there's limited space, limited titles and the presentation is reduced, often, to a box on a street corner.
Jeff Bewkes recently compared the business model to $1 movie theaters, which died out long ago due in no small part to a lack of support from the majors.
So, like everything else, it all comes down to price points and profits.
"The comfortable price point is more in the video-on-demand mode or the current Netflix and Blockbuster model" said the executive. "Charging $3.99 for a title -- and then being involved with revenue sharing. There's money to be made that way. Who's making anything on $1?"
As for the contention that this is another example of studios not adapting to new technologies, movie kiosks have been around for a while and there have been no breakout success stories.
For its part, Redbox doesn't have an easy fight ahead. Blockbuster's past few years have been shaky thanks to Netflix's Web-based convenience. Going to the store lost its appeal...and you still have to do that with Redbox, though instead of a brick-and-mortar location, it's that drive-to street corner.
Finally, customers want choice: if Redbox loses the pending lawsuits then the lack of new titles will certainly kill its mojo...and maybe the whole operation.
Comments
"Still, it's hard to argue with the fact that $1 rentals feel like they cheapen the glamour of the movies. What's more, there's limited space, limited titles and the presentation is reduced, often, to a box on a street corner."
This is like paying for atmosphere in a restaurant. The entertainment value ain't in the movie poster....it's in the movie.
"Who's making anything on $1?" The answers here are:
1. The Consumer is making something....a GREAT value that's been overpriced for a loooooong time.
2. Redbox is obviously making money, or they would have folded long ago.
3. Coinstar's stockholders.
And $2 a night games are on the way!
20th Century Fox, Warner Home Video and Universal Studios have lived off of the fat of the land far too long. I say boycott them and then watch as they dry up. I love the idea of reserving movies online for a buck.
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