Analyst: Redbox Improves Workaround For Fox, Warner Titles

Night at the Museum: Battle of the Smithsonian

By : Chris Tribbey | Posted: 16 Nov 2009
ctribbey@questex.com

Two weeks after finding Ice Age: Dawn of the Dinosaurs stocked in just more than two-thirds of Redbox kiosks, financial services firm Merriman Curhan Ford checked the same 50-plus kiosks in 17 cities Nov. 14 and found the 20th Century Fox Home Entertainment DVD stocked in 94% of machines.

“With that movie still in the top six rentals for the past week, we are encouraged by the incremental gains in stocking the title with the company’s workaround program,” said Merriman analyst Eric Wold. He was referring to Redbox’s workaround program for Fox and Warner Home Video new releases. Those two studios are keeping their wholesalers from selling to the rental kiosk operator, forcing Redbox to buy the DVDs at retail.

Redbox will have more big fourth-quarter titles to stock via retail purchases, including Warner’s Terminator: Salvation, The Hangover and Harry Potter and the Half-Blood Prince; Fox’s Night at the Museum: Battle of the Smithsonian; and Universal Studios Home Entertainment’s Public Enemies.

Wold also noted that while reporting positive second quarter results Nov. 9, Lionsgate said that its first major release (Crank 2: High Voltage; Sept. 8) since formalizing a distribution agreement with Redbox in August “did not display any evidence of cannibalization through any channel” and may have even driven consumers to buy after they rented.

This is so far off base. So far there has been 4 releases from these studios and I Love you Beth Cooper and Aliens in the Attic aren't in any Red Box kiosk. Orphan is only in less then a quarter of them. The only title they have been successfull with is Ice Age that's it that's all I would call this work around a major failure especially since 3/4 of the Dec releases are from Fox, Universal and Warner.

Commented by Joe B
Posted on 2009-11-16 17:18:20

I can all but guarantee you that this week there are at least 4 titles "Bruno, My sisters keeper, Wild Child and Limits of Control" not one of these will be found in any of the Red Box kiosk for weeks if ever. It is not cost effective to have 800 employees scouring the earth trying to find enough copies. These titles aren't 100+ million dollar films that you can buy 100 copies at a time at wally like Ice Age and those are the only ones Red box can get enough copies to stock. This Eric Wold seems to be behind any positive news surrounding red box. I have a sneaky feeling that he has an interest in this stock and has seen it decline over 15% in the last week and a half and is trying to find a way to get the stock back up. Because claiming that these work arounds are working in anyway is a complete fabrication of reality.

Commented by Oz
Posted on 2009-11-17 15:01:46

OK, I realise that Redbox isn't good for the industry, but fair economic forces would require them to either reach a more competitive price point, or fail. Fox and Warner ordering the distributors to not sell to these guys is a direct violation of the First Sale Doctrine, and should worry us a lot more than a money-hemmoraging Redbox should.