Warner Bros., Redbox Divided on DVD Terms

Talking up UltraViolet and Flixster, home entertainment president Kevin Tsujihara says negotiations are ongoing with the giant operator of DVD kiosks.

Reports that Redbox had agreed to a 56-day moratorium on renting DVD’s from Warner Bros. were a bit premature, and it appears that the two sides may be far apart on reaching a deal.

Speaking at the Morgan Stanley Technology, Media & Telecom conference mostly to promote UltraViolet as the next revolutionary thing, WB home entertainment president Kevin Tsujihara said negotiations are ongoing with Redbox.

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Redbox, though, did not respond Wednesday when asked if it is engaging in negotiations with WB and, in fact, three weeks ago it was touting a non-agreement with WB as though it were beneficial to Redbox's cut-rate kiosk business.

Until recently, Warner Bros. had been waiting 28 days after their DVDs hit retailers before supplying them to Redbox but the studio wanted that doubled and Redbox said no. Since their 28-day deal expired more than a month ago, Redbox has been buying the DVDs at a heftier price through third parties.

"We now plan to have Warner titles in the kiosks weeks earlier and have more flexibility in deciding which titles to purchase," Redbox's parent Coinstar boasted in a press release that announced its  quarterly earnings.

Netflix, on the other hand, has agreed to WB’s 56-day waiting period.

Most of Tsujihara’s presentation Wednesday at the investor's conference, though, focused on UltraViolet and Flixster, the latter being a movie-discovery site Time Warner purchased in May.

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Tsujihara says there are big plans for Flixster to morph into a sort of companion site for UltraViolet users, where digital copies of movies can be obtained and organized and what have you.

Tsujihara also said Flixster will make its way to TV screens as early as this year, much in the same way streaming content from Netflix has become such an easy television experience. He specifically mentioned Roku and Google TV as potential partners.

Flixster’s and Ultraviolet’s future involves consumers up-converting their current DVD collections in terms of quality, and for storage in the cloud, all at a fair price, of course.

The scheme could mean a windfall for the home-entertainment industry, given that there are 10 billion DVDs in U.S. households and an additional 10 billion internationally. About 20 percent of those DVDs are from WB.

Tsujihara also said that VOD is seven times more profitable than are rentals at discount DVD kiosks or subscription services like Netflix, but sell-through is as much as 30 times more profitable.

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