Redbox Inks Deals With Summit, NCircle2 Nov, 2009 By: Chris Tribbey
Redbox said Nov. 2 that it had signed a distribution deal with Summit Entertainment, owner of this year’s hit DVD Twilight. The two-year agreement begins Jan. 1, 2010, and guarantees the kiosk operator new titles the day they’re released, Redbox president Mitch Lowe said.
“Having Summit’s films distributed through the Redbox network provides consumers greater access to our broad range of titles,” said Steve Nickerson, Summit’s president of home entertainment. “In addition, by Redbox agreeing to destroy DVDs once they pass their rental life, the risk of low-cost, previously viewed DVDs being sold into the market is lowered.”
Redbox also announced a similar two-year agreement with children’s DVD distributor NCircle Entertainment. Financial details for the agreements were not immediately available.
Debbie Ries, SVP and GM of NCircle Entertainment, said the agreement would lead to increased DVD sales at retail. “Redbox rentals allow the consumer to try before they buy,” she said.
The announcements come just three days before Redbox parent Coinstar posts its third quarter financial results. Investment research firm Merriman Curhan Ford estimated Nov. 2 that Coinstar would post revenues over $332 million and profits of $60 million for the quarter.
Summit joins Paramount Home Entertainment, Lionsgate and Sony Pictures Home Entertainment on the list of studios Redbox has inked formal distribution agreements with since July.
Meanwhile, Redbox is in court with 20th Century Fox Home Entertainment, Universal Studios Home Entertainment and Warner Home Video over those studios’ attempts to keep wholesalers from selling new release DVDs to the kiosk operator.
Merriman Curhan Ford said Nov. 2 that the holdback of new release DVDs by Warner and Fox may be impacting Redbox’s attempts to keep those studios’ titles stocked. Visiting more than 50 kiosk locations in 16 different states Oct. 31, the firm found Fox’s Ice Age: Dawn of the Dinosaurs stocked in only 67% of machines, and completely checked out in 65% of those. Warner’s Orphan was listed as available in 51% of machines, but was completely checked out in 100% of those kiosks.
“Since those two titles from Fox and Warner Bros. both hit shelves last Tuesday (Oct. 27), it is obvious that the recently imposed restricted distribution from those studios is having some impact on Redbox’s ability to adequately stock the titles,” wrote Merriman analyst Eric Wold.
By comparison, Paramount Home Entertainment’s Transformers: Revenge of the Fallen (Oct. 20) was stocked in 100% of machines, and checked out in only 14%. Paramount’s revenue-sharing deal with Redbox lasts through the end of the year, though the studio has the option to extend it through 2014. Redbox is guaranteed new release titles from Paramount, on the condition that the DVDs are eventually destroyed. The studio is also guaranteed Redbox’s rental data.
Wold wrote that Redbox could be in discussions with a major DVD retailer to buy large quantities of Warner, Universal and Fox titles. That type of arrangement could help Redbox work around those studios’ wholesaler restrictions and eliminate the need for employees to buy DVDs directly at retail stores.