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Blockbuster, DirecTV Plug ‘Window’ Advantage

21 Jul, 2010 By: Erik Gruenwedel

Its stock is delisted and worth pennies, but that hasn’t stopped Blockbuster from rolling out a national television ad highlighting its 28-day advantage on Redbox and Netflix for select new-release titles.

In addition, satellite provider DirecTV this week joined cable operators such as Time Warner Cable underscoring its first-mover advantage on new releases by offering consumers a free ($4.99 value) transactional video-on-demand (VOD) rental of titles not available at kiosk vendor Redbox or by-mail distributor Netflix.

Transactional VOD generated an estimated $865 million in the first-half of 2010, up 19.1% over the same period last year, according to DEG: The Digital Entertainment Group.

Earlier this year 20th Century Fox Home Entertainment, Warner Home Video and Universal Studios Home Entertainment ironed out distribution agreements with Redbox and Netflix that called for a 28-day delay of new releases to the market leaders in exchange for better copy depth and distribution terms. Paramount Home Entertainment, Sony Pictures Home Entertainment, Lionsgate, and Summit Home Entertainment have separate street-date deals with Redbox, while Walt Disney Studios Home Entertainment releases titles in all channels without delays.

It is this latter group of studios that continues to undermine, in part, both physical and digital sellthrough by distributing to kiosks on street date, said analyst Richard Greenfield with BTIG Research in New York.

Greenfield, a long-time critic of the commodity pricing of new-release DVD/Blu-ray Disc movies via kiosks, applauded efforts by Blockbuster, DirecTV and cable operators to exploit the 28-day window — despite questionable impact on consumers.

The analyst, in a blog post, said the window has limited influence on Netflix subscribers, who primarily (70%) rent catalog fare, in addition to the average consumer.

“We find it hard to believe that the message will really hit home for consumers if they can find [top-two 2010 box office hits] Alice in Wonderland and Toy Story 3 [Nov. 9] available simultaneously at Blockbuster, Netflix and Redbox, but can only find titles such as Despicable Me, Inception and A-Team at Blockbuster for 28 days before they show up at Redbox and Netflix,” Greenfield wrote.

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