Seems like only yesterday when Warner Bros. decided to impose a 56-day rental delay on their newest releases, in the hopes that it would increase VOD sales, by way of the studio-favored Ultraviolet licensing system, and support stronger retail sales of DVDs and, more importantly, Blu-ray discs. Suddenly, they’re making nice with Redbox and the kiosk service will now get Warner titles only 28-days after the sales date.The 56-day window Warners intended to impose was seen as a strong shot across the bow to both Redbox and Netflix, but resulted in hurting mom n’ pop rental stores as well. Warner’s great hope was that the other studios would lend their support and impose their own longer window on rentals, but that never transpired, forcing Warners to reverse course, at least in regards to Redbox (as of January, 2013) and brick n’ mortar rental stores (as of October 30). Netflix, however, still appears to be on the outs, having already accepted the 56-day window that Redbox did not.
Having stood firm against the 56-day window, Redbox took a risk and won. Their kiosks will now get Warner Bros. DVD and Blu-ray discs 28-days after the sale date (or street date) for each title per the new deal. Of course, Warner’s didn’t budge without making sure their own interests were protected. As part of the two-year deal, Redbox is expected to push the Ultraviolet “digital locker” program that Warners and most of the other studios favor to restrict premium content, allowing users to view it on any device for a premium price.
This puts Redbox (a subsidiary of Coinstar, Inc.) on firm footing for the future, as the Ultraviolet program is part of the larger Digital Entertainment Content Ecosystem (DECE) that nearly every major media player (save for Disney) fully backs as a solution to both piracy and the decline of sales through either traditional retail markets or newly developed digital distribution systems (such as VOD sales through the Sony Store, iTunes, etc.). It certainly means that Redbox kiosks won’t be lacking for content, but more importantly, it means that Redbox Instant by Verizon will be able to stream the same premium content once it launches… something that might give Netflix subscribers another reason to flee Netflix’s Instant Watch service.
This isn’t about creating competition between services… After all, Redbox is now receiving a kind of favored-nation status that Netflix has long craved for itself. The studio might seem to be playing favorites here, but ultimately it’s about the content producers putting what they feel is a proper price on their valued product, rather than letting a company like Netflix distribute it virtually wholesale to streaming subscribers at a low price (yes, it’s still a low monthly rate by both content producers and Wall St. analysts, folks). Netflix may ink a similar deal with Warners and other studios, but it will probably have to re-evaluate how they price their services and cede more control to the studios in that regard, something that Netflix CEO, Reed Hastings, has always been loath to do.