Fox to Redbox: Hands off our movies for 30 days

20th Century Fox is thinking outside the box. Redbox, that is: The studio has just told the DVD kiosk company that it can't have DVDs on launch day.

Fox has instructed its DVD wholesalers not to sell discs to Redbox -- which is owned by Coinstar Inc. -- or other DVD kiosk companies until 30 days after they are released.

Many studios are wary of Redbox, whose business has doubled in the last year, because its kiosks rent out DVDs for just $1 per night. That undercuts stores with higher rental prices, Netflix and disc sales. All three carry significantly higher margins than studios can get even through a revenue-sharing agreement with Redbox.

Fox's move follows Universal Pictures' efforts to cut off Redbox. Universal is in court with Coinstar after telling wholesalers to cut off Redbox unless it agreed to a similar 45-day window. After today's move, Fox could also find itself in a legal dust-up with Redbox.

Sony Pictures is the only studio so far to reach an agreement with Redbox. Its deal guarantees revenue of $460 million over five years. Fox apparently decided that such an agreement wouldn't be acceptable.

"The basis of this position is to continue to provide the consumer with broad title choice and access to Fox movies while maintaining the quality image and value perception of Fox movies," a studio spokesperson said in an e-mailed statement. "Our desire is to maintain for Fox movies a thriving network of distribution serving all types of consumer preferences, on reasonable business terms for Fox as well as our distribution partners."

In a conference call with analysts and media earlier today after its fourth-quarter report, Chase Carey, president and chief operating officer of Fox's parent company News Corp., spoke more directly on the topic.

"Having our [movies] rented at $1 in the rental window is grossly undervaluing our products," he said.

Last week, Time Warner CEO Jeff Bewkes compared Redbox to $1 movie theaters to $1 movie theaters and said Warner Bros. movies "probably" shouldn't be available through kiosks until well after they first go on sale.

It's possible that Redbox will continue to offer Fox DVDs by purchasing them at retail, as it has done with Universal releases.

A spokesperson for Redbox did not have an immediate response to the move.

Update (Aug. 6, 10 AM): Mitch Lowe, president of Redbox, issued a statement in response to Fox's decision indicating that he has no intentions of agreeing to the studio's demands: "We were informed of Fox’s position late today.  Redbox stands behind our convenience and value that we offer consumers, and we’re pleased to make DVDs available the day they are released."

-- Ben Fritz

Photo: A Redbox kiosk in an Albertsons supermarket in Santa Monica. Credit: Lawrence K. Ho / Los Angeles Times

Comments

[Frank Z]

Boy! Rupert's getting it all backwards! He wants to charge for internet content with Google still out there. Now he's going to make people wait 30 days to rent from RedBoxes. Why doesn't he just put up the torrents himself???

[XD]

Quality of Fox films. That is laughable. All they release are a bunch of turd for movies. That I wouldn't pay the cheap price of $1. These guys are living in the past and standing in the way of progress.

[Drexl]

There are a couple of points I wanted to make about this article:

1.) Are Universal, Fox, and MGM going to pull their movies from $1 movie theatres so that they aren't undervalued? What about that old TV uncle Earl has? If he watches a movie on that old Curtis Mathes, Is that going to undervalue the movies? The bottom line is that these movie studios want MORE money and the money that RedBox is offering isn't enough.

2.) You know what undercuts even Redbox and the $1 Movie Theatre? Your public library!!! Go rent all the new releases you want legally for FREE!!!

This article reminds me of the time Nintendo fought in court to make sure it's NES cartridges couldn't be rented at video stores. That worked out well for the big N.

The studios will lose this battle.

Power to the people!!!

- Drexl

[Samantha]

There are more choices for entertainment than I can use. If Fox and Universal want to put themselves out of the running, who cares? They won't be missed because I'll be watching somebody else's movies.

[JDK]

The issue is this we are in a tough economy and Redbox came in at the right time. People are trying to save money but still live their lives. People take their families to the theater and its costs on the average of 40 to see a movie. Then the same movie costs about 19 dollars 23 for blue ray to purchase so of course the movie purchasing would go down. Now you have places who rent for 5-7 dollars ok so people are alright with this Redbox makes it absolutely affordable with 1 dollar per night for all families. These studios can not blame Redbox entirely for sluggish DVD sales its the ECONOMY people are just trying to save money! No you would think these studios would rather SELL to Redbox with their high volume of rentals then to just depend on regular retail sales. DO what Sony did don't let Redbox sell them after the closing date. I think Universal and Fox are not thinking about the customer but themselves their pocket. Not what the customer needs and wants.

[Blockbuster]

2 weeks ago, Blockbuster launched the $1 Express Box in Orlando area. The same Kiosk concept as RedBox, sleek looking BlueBox!. So, is Fox requesting distributors not to sell DVDs to Blockbusters for first 30 days.