By : Chris Tribbey | Posted: 14 Dec 2009
Paramount Home Entertainment will have another six months to decide whether it wants a long-term relationship with Redbox, the DVD rental kiosk company said Dec. 14.
New release DVDs from the studio will continue to appear on street date in Redbox kiosks through June 30, 2010, at which point the studio will have the option of continuing its revenue-sharing deal through 2014. When the agreement was announced in August, Paramount had until the end of 2009 to decide whether to continue supplying DVDs to Redbox long-term.
Paramount would still have the option of terminating the agreement in December 2011. For its part, Redbox is supplying rental data to the studio, and has agreed to destroy Paramount titles after they’re removed from the kiosks.
“We are enjoying our business relationship with Redbox and the data from our initial trial period has been encouraging,” said Dennis Maguire, worldwide president of Paramount Home Entertainment. “We are extending the time period that we have to exercise our option in order to give us more time to assess the long-term potential of this business relationship.”
Redbox president Mitch Lowe said the extension of the trial agreement was “another positive step” and “underscores our commitment to working with the industry.”
Currently Redbox is in court with Universal Studios Home Entertainment, Warner Home Video and 20th Century Fox Home Entertainment, fighting those studios’ attempts to keep new release DVDs out of kiosks for 28 to 45 days after street date, while ordering wholesalers Ingram Entertainment and Video Product Distributors to stop selling to Redbox.
Redbox has been forced to find other sources for new-release DVDs from those studios, and Eric Wold, analyst with Merriman Curhan Ford in New York, said adding a fourth to start the New Year would have hurt Redbox.
“The concern is that Paramount is dragging this out further until they have more visibility on where the courts are leaning on the lawsuits,” he said. “Paramount has an incentive to sign a deal with Redbox earlier rather than later to get more preferential treatment and shelf space, but this could be interpreted as a move by Paramount to give them more time and remain ‘neutral’ in the courts’ eyes.”