Ripples in the DVD kiosk industry continue to expand in the wake of last week’s announcement that Coinstar Inc. finalized a multi-year deal allowing redbox to offer day-of-release DVD and Blu-ray titles from Paramount Home Entertainment Inc.
Industry insiders speculate that the new agreement will encourage other studios to strike similar deals with DVD kiosk companies such as redbox and NCR Corporation, which has deployed about 6,000 BLOCKBUSTER Express-branded DVD-rental kiosks in the past year.
"Our BLOCKBUSTER Express kiosks currently offer day-of-release titles because we purchase them from third-party retailers, but we continue to have discussions with studios about licensing agreements that would allow NCR to get day-of-release titles directly from the source," said Jeff Dudash, a spokesperson for NCR’s DVD kiosk division.
The deal between redbox and Paramount was reached following a 10-month trial license agreement and analysis, which concluded that day-and-date rentals at kiosks had minimal impact on DVD sales, according to a statement issued by redbox.
"After analyzing the data from our test period we have concluded that redbox day-and-date rental activity has had minimal impact on our DVD sales," Dennis Maguire, Worldwide President of Paramount Home Entertainment, said in a press release. "By granting redbox day-and-date availability we are allowing the consumer a choice of how to consume our movies while maximizing the profitability of our releases in the home entertainment window."
Mitch Lowe, president of redbox, said the arrangement is "a win, win and win—for consumers, Paramount and redbox." His company expects to pay about $575 million to the studio during the course of the agreement, which runs through the end of 2014, according to the Los Angeles Times.
Following last week’s announcement, stocks zig-zagged for both Coinstar, parent company of redbox, and rival Blockbuster Inc. For Blockbuster, the roller coaster ride isn’t over. During the company’s annual meeting this week in Dallas, shareholders are scheduled to vote (June 24) on board nominees, including a controversial bid for director by Gregory Meyer, who founded a DVD rental kiosk business in 2001 that was later sold to Coinstar Inc. Earlier this month, Blockbuster began issuing press releases urging stockholders to vote in favor of incumbent director Gary Fernandes instead of Meyer. A live audio webcast of the meeting and an archived version will be available at Blockbuster’s investor relations site at http://investor.blockbuster.com.
Meanwhile, Paramount’s strength as a major player among studios seems to be expanding. This summer’s DVD and Blu-ray releases include Martin Scorsese's "Shutter Island" with Leonardo DiCaprio. In addition, the studio recently closed a deal to film "Mission Impossible IV." That film, starring Tom Cruise, is set to open Memorial Day weekend 2011.
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