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Kiosks Center of the Storm — Again

10 Aug, 2009 By: Stephanie Prange

I really was determined not to write a column about kiosks this week. But then Fox decided to issue a statement that Redbox shouldn’t have its discs until 30 days after everyone else gets them, turning it into a kind of dollar movie theater for home video.

The industry seemingly can’t make up its mind about kiosks. While Sony recently signed a $460 milllion deal to offer its titles through Redbox, other studios are either embroiled in a lawsuit with the kiosk disc rental company (Universal) or don’t want to give it titles until later or without getting paid handsomely (Fox, and probably the others).

It seems kiosks are at the center of the storm over dwindling content revenue. Sure, piracy is a problem. Sure, illegal downloading is a problem. Sure, the fact that many middlemen are offering studio content streamed on the Internet at no charge may be a problem.

But the real problem, at least according to some studios, is that a $1 rental at Redbox makes consumers think twice about paying $15 to $20 and up for new releases on DVD or Blu-ray Disc.

When you get right down to it, the problem is my neighbor (and many like her), who has decided to cut back on spending and last month rented a disc from Redbox for the first time. In better times, she would have gladly purchased that disc at Wal-Mart.

The studios are none too happy that she’s making that change, but if that is the new consumer spending habit, then by golly the studios want a piece of the action.

In my time at this magazine, the video industry has moved from a kind of backwater — where studios got a fairly predictable amount of extra revenue in selling VHS and discs to the rental market — to the primary segment of the movie financial pyramid.

Los Angeles Times columnist Patrick Goldstein Aug. 5 noted that actors and filmmakers are getting less money upfront in part because studios cannot depend on lucrative disc sales to make hefty profits (read the story ). They are making talent share in the video risk, rather the just the theatrical take, he wrote.

Thus, all studio eyes (and perhaps those of the talent) are turned on the home video market — and those $1 rentals are making them squirm.

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