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Paramount, Redbox Extend Relationship


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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.” 

Authors


User comments

Commented by Jon
Posted on 2009-12-14 10:12:24

Sounds to me like Paramount didn't excactly get the answers they were looking for or they wouldn't of added another opt out clause. It was probabally the only way Redbox could get them to extend the contract. I don't understand why they continue to have 1 foot in and 1 foot out. Adding another 6 month opt out clause kind of says where they see this whole thing going I just wish they would of opted out instead of squeezing every penny they can out of this. It's pretty obvious the longer Redbox is aloud to devalue the Entertainment Industry the greater the damage will be.


Commented by Michael
Posted on 2009-12-14 12:08:48

Ahh, the standard FUD from our friends over at VBG, huh, Jon? While I can appreciate that it is your goal to keep independent video stores alive and kicking for another round, but you need to accept the facts: Redbox is the future of the local entertainment industry, and there is nothing you can do to stop it. The only thing that will stop kiosks like Redbox from thriving is the move to digital/streaming video - and then I believe Redbox will adapt to that as well with their own digital offerings/partnerships as they are now testing. Barring that, we will continue to see old-school B&M video stores like Blockbuster and those you represent closing down and kiosks popping up. Perhaps it is you, Jon, that needs to stop leading your customers and clients down the path of no return. It seems to me you are the one trying to "squeeze every penny" out of this, doesn't it? VBG customers, get out now before it's too late. The ship is sinking.





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