Universal Re-Ups Distribution Deal With Redbox1 Oct, 2014 By: Erik Gruenwedel
Agreement continues 28-day embargo on new-release titles
Redbox has renewed a packaged-media distribution agreement through Dec. 31, 2015, with Universal Studios Home Entertainment, according to a regulatory filing from the kiosk’s corporate parent Outerwall. The previous deal was set to expire this December.
The agreement is a good sign for Redbox, which is facing contract renewals with most studios, including Lionsgate. The latter’s deal expired at the end of August with no new pact in place.
Eric Wold, analyst with B. Riley & Co. in Los Angeles, said the Universal renewal lessens somewhat ongoing Wall Street uncertainties about Outerwall, despite the fact the analyst says the studio is the least contentious regarding street date embargoes, unit pricing and quantities compared with Warner Home Video and 20th Century Fox Home Entertainment. Warner’s deal expires Dec. 31, while Fox’s agreement ends next April.
“We will reserve judgment on studio trends until we get a better sense of the remaining ones, especially as the Redbox Instant carrot might be disappearing,” Wold wrote in an Oct. 1 note.
Indeed, there have been calls for Outerwall to shutter or sell Redbox Instant, which continues to lose money since its launch last year.
Outstanding studio agreements include: Paramount Home Media Distribution (12/31/14), Lionsgate and Summit Entertainment (likely combined).
Regardless, Wold contends ongoing non-studio trends such as poor release slates, Redbox Instant fiscal drain, and questionable ability to raise rental prices, among other issues, undermine the kiosk vendor’s ability to reach profitability in early 2015.