Warner Bros., Redbox ink DVD deal

Retailer agrees to delay in stocking kiosks with new WB titles

The kiosk war isn't over, but it's winding down.

Warner Bros. and Redbox reached a deal Tuesday stipulating that Redbox won't stock its dollar-rental kiosks with Warners titles for the first four weeks after their initial release. Terms of the agreement are similar to Redbox pacts reached with Sony, Lionsgate and Paramount.

Warners' deal ends its litigation with Redbox, which also promised not resell Warners' discs once removed from rental kiosks. In exchange, the studio will supply Redbox with a robust flow of film titles from 28 days after their initial release.

Warner Home Video -- which like Universal, Fox and Par had refused to supply discs to any dollar-rental outfits -- will continue to supply traditional disc-rental companies with new releases from their "street date." Last month, Warners announced a pact with Netflix in which the online-rentals company secured a boosted number of films for its digital rentals business in exchange for Warners' witholding releases from Netflix's discs-by-mail subscribers for the first 28 days after their release.

Uni and Fox continue to discuss the concept of a sell-through window with Redbox, but prospects of reaching an agreement are unclear. Redbox has sued both studios for refusing to allow the studios' wholesalers to supply the kiosk company with DVDs or Blu-ray Discs for roughly the first month following street dates.

"We support a vending window in light of the changing rental landscape, and we are looking at a variety of new approaches," Fox said Tuesday. "Since we are in litigation with Redbox, however, our policy is that we are unable to comment further."

Redbox has been trying to replace product denied by studios it's sued by buying at retail -- mostly from big box retailers, which discount DVDs heavily -- but results have been mixed. In reaching agreements with four major suppliers, the dollar-rentals company essentially agreed to stock product later in exchange for securing DVDs more cheaply.

"This is a very good deal for Redbox customers," Redbox president Mitch Lowe said. "There will be a lot more copies and a lot more selection in Warner Bros. titles."

For Warners, there appears little downside. Not only has it removed the burden of litigation over its refusal to supply Redbox, but like its dollar rentals, the kiosk company's practice of reselling older titles to the used-disc market has been considered a drag on Warners' DVD sales.

"We are very pleased to have had the opportunity to sit down with Redbox and negotiate an arrangement that benefits both parties and allows us to continue making our films available to Redbox customers," Warner Bros. Home Entertainment Group president Kevin Tsujihara said. "The 28-day window enables us to get the most from the sales potential of our titles and maximize VOD usage."

The new agreement runs through Jan. 31, 2012.

"The 28-day window for Redbox balances the economics of our relationship while continuing to offer great value to their customers," WHV president Ron Sanders said.

Lowe said Redbox may add digital rentals to its business mix, much like kiosk competitor Blockbuster Express. But he said tests of related technology continue, and a rollout is at least months away.
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