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Studios Are Embracing Rental

3 Aug, 2009 By: Thomas K. Arnold

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You’ve got to hand it to the studios — if nothing else, they sure know how to follow the money.

After more than half a year of slumping DVD sales but soaring rental action, studios that had previously all but ignored the rental market are all of a sudden clamoring to get back in.

Paramount Home Entertainment and Summit Entertainment announced a “back to the future” ploy in which they will release titles exclusively to the rental market before selling them to the big retailers.

When Summit’s The Brothers Bloom, currently near the end of a limited theatrical release, hits DVD and Blu-ray Disc Sept. 29, sales will be limited to rental dealers. Wal-Mart, Best Buy and other big sellthrough merchants are going to have to wait until the first part of 2010 before they can buy the title from Summit, at a discount from the usual wholesale price for a new release.

Similarly, Paramount announced that when the Wayans Brothers comedy Dance Flick comes out on disc Sept. 8, a DVD of the original ‘PG-13’ version will be sold only to rental dealers. Sellthrough retailers will have to pick up the Blu-ray Disc edition, featuring an unrated version of the film plus gobs of extras, or wait four to eight weeks for a sellthrough DVD release.

Both moves came just one week after Sony Pictures Home Entertainment stunned — and, some say, angered — other studios by reaching an agreement with Redbox to effectively lease its titles for distribution through the chain’s 17,000 rental kiosks, in a five-year deal valued at $460 million. Studio executives have long railed against Redbox for allegedly devaluing DVDs by renting them for only a buck — and, more recently, for cannibalizing the sellthrough business by setting up shop in the entryways of Wal-Mart stores. Universal Studios Home Entertainment has even gone to court to try to stop Redbox from renting its titles, while another studio president told me that in his view, Redbox kiosks are the equivalent of “dollar movie houses” that certainly should not get first-run releases.

But hey, according to mid-year estimates from Rentrak, consumer spending on video rentals is up a remarkable 8.3% so far this year. And studio executives, who undoubtedly are getting hammered by their bosses for lackluster DVD sales numbers, are going to do what they have to do to make those elusive budgets and forecasts — even if it means sleeping with the enemy, or dancing with the devil.

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