Redbox, Paramount Extend Distribution Deal15 Jun, 2010 By: Erik Gruenwedel
Redbox and Paramount Home Entertainment have extended a distribution deal granting the kiosk vendor continued access to DVD and for the first time Blu-ray Disc new releases on street date.
Significant to the extension is that Redbox will actively promote sellthrough of Paramount titles via signage on its 22,000 kiosks and e-mail notices to registered users.
Dennis Maguire, worldwide president of Paramount Home Entertainment, said the new multiyear agreement came following a 10-month analysis of its original five-year, $575 million agreement begun in August 2009.
“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,” Maguire said.
Redbox president Mitch Lowe said the kiosks will not sell Paramount titles, opting instead to promote their availability at third-party retailers and online.
“It’s about raising awareness of theatrical titles and other Paramount products,” Lowe said. “We continue to make the case to all of the studios that our customers are big entertainment consumers. They go to the movies. They buy movies. They rent movies.
“That’s the argument we have made successfully to four of the studios and unsuccessfully to three of the studios.”
Indeed, Warner Home Video, Universal Studios Home Entertainment and 20th Century Fox Home Entertainment delay new release shipments to Redbox as part of separate deals with the kiosk vendor.
Eric Wold, analyst with Merriman Curhan Ford in New York, said Redbox kiosks have been advertising shills for a number of consumer brands, including Pepsi and Orville Redenbacher popcorn.
“It's a great use of their real estate and brand recognition,” Wold said.
Analyst John Kraft with D.A. Davidson & Co. in Lake Oswego, Ore., said the deal reaffirms kiosk’s prowess.
“We believe the risk of other studios moving towards a 28-day delay has decreased,” Kraft wrote in a note.