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Disney changing stance on Redbox?

September 9, 2009 | 11:47 am


Could Walt Disney Co. be changing its stance toward Redbox, whose dollar DVD rentals have roiled Hollywood?

Pali Research analyst Richard Greenfield wrote today (registration required) that Disney -- which sells DVDs to Redbox through third-party distributors -- is seeking "a significantly different arrangement" with the kiosk operator for the November release of Pixar Animation's film "Up." Greenfield described these terms as "far less favorable" and may cause Redbox to purchase "Up" outside of Disney's retailer program.

This would align Disney with the three major studios (Universal, Fox and Warner Bros.) that have sought to impose at least a 28-day waiting period on Redbox, to protect sales of newly released DVDs.

Disney declined to comment about Greenfield's report. 

During its most recent quarterly earnings call with analysts, Disney President and Chief Executive Bob Iger acknowledged the recession is hurting DVD sales and that there has been an accompanying rise in digital and physical movie rentals over the last three quarters. The convenience and value of $1 DVD rentals is compelling for cost-conscious consumers -- and Iger predicted that business will continue to grow.

But Iger portrayed Redbox as not a threat to Disney, because of the entertainment giant's strategy of making family films that people are more likely to buy than rent.

"If you want to watch a Pixar film, or you want your kids to watch it 50 times,"  he said, "then owning it is a lot more convenient and more valuable than renting it," Iger said.

-- Dawn C. Chmielewski

Photo:  Aisha Smith chooses a DVD at a Redbox rental unit in a north Seattle grocery store. Credit: Associated Press