Redbox to Receive DVD’s Directly from Lionsgate, Sony

Two major studios inked distribution deals with automated DVD kiosk suppliers that will enable retailers to sell new releases from the studios at the same time they hit video stores.

Santa Monica, Calif.-based Lionsgate has revealed a pact to supply the dollar-rentals king with movie discs simultaneously with other retail outlets. The Lionsgate-Redbox deal will run from Sept. 1 through August 2014 unless the studio opts out in 2011.

“We chose to be part of the largest growth engine in the business,” said Lionsgate president Steve Beeks. “It’s a win for Lionsgate and a win for Redbox.”

Sony also recently struck a deal to provide DVDs directly to Oakbridge Terrace, Ill.-based Redbox, which operates a nationwide network of 15,000 rental kiosks. And Disney head Bob Iger recently revealed for the first time that the studio has had a similar deal with unspecified kiosk-DVD retailers for some time.

In exchange for its product agreements with Lionsgate and Sony, Redbox agreed not to resell old DVDs on the used-disc market -- a practice that has riled studio execs even more than the company’s ultra-low rental price. Studio home entertainment execs complain that dollar rentals are starting to reduce consumers’ enthusiasm for purchasing DVDs.

A unit of Bellvue, wash.-based publicly traded cash-machine company Coinstar, Redbox gets DVDs released by most other studios indirectly from wholesalers, to whom it resells used discs.

Universal, however, has ordered its wholesalers not to deal with Redbox within the first 45 days of titles’ release dates, a position that’s prompted an exchange of lawsuits between Redbox and Universal. Just last week, Fox ordered its wholesalers to stop supplying Redbox with DVDs for 30 days after initial release.

In other news, Redbox filed suit against 20th Century Fox Home Entertainment over the studio’s decision to impose a 30-day delay on making its new DVD releases available to the rental kiosk company.

Fox becomes the second studio targeted by Redbox in a lawsuit. Universal Studios Home Entertainment last year was sued after withholding its new DVD releases from Redbox by 45 days. Redbox president Mitch Lowe said that while the suit works its way through the courts, the kiosk company would simply buy Fox DVDs at retail and rent them as soon as they come out, just as the company currently does with Universal Studios releases.

- Nielsen Business Media
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