As a result, kiosk rental company Redbox will have to buy Warner DVDs from retailers like Wal-Mart at a higher price but will no longer make customers wait 28 days after discs go on sale to rent them, as it did under a previous agreement with the studio.
The two sides were clashing earlier this month when Warner Bros. announced it would sell its DVDs and Blu-ray discs only to rental companies that agreed to wait until 56 days after they go on sale. Warner executives believe that the delay encourages consumers to buy DVDs and Blu-rays or rent movies via video-on-demand, both of which are more profitable transactions for the studio at a time when home entertainment revenue has been shrinking for years.
Two years ago, after a similar dispute, Redbox agreed to the 28-day delay in order to buy movies directly from Warner Bros. at a discount. But Redbox has concluded that 56 days is too long to make its consumers — who often look for new releases in the red kiosks — wait.
In a statement, Redbox senior vice president of marketing Gary Cohen said the company “will work to provide Warner Bros.’ movies through alternate means.” That will most likely mean buying the discs in bulk from retailers or other distributors who charge more than the studio when it sells directly.
A Warner Bros. spokesman fired back in a statement: “The consumer is best served by a windowing and pricing structure that ensures a healthy film business continuing to deliver quality movies. We hope to continue discussions with Redbox and reach a mutually agreed upon solution to this situation, but we fully intend to do what is best for our business, our consumers and the industry as a whole.”
A person close to the matter but not authorized to speak publicly said the companies had continued talks in hopes of reaching a compromise throughout January. But the two sides could not find common ground and consequently don’t currently plan on having more discussions.
Among other major retailers, Netflix agreed to abide by the 56-day delay, but Blockbuster has not, meaning it too will have to buy Warner discs from other sources.
Redbox currently has direct deals with all other Hollywood studios, but its agreement with Universal Pictures expires in April. Universal currently imposes a 28-day delay, and it’s not yet known whether it will, like Warner, try to extend it longer.
The first Warner Bros. release that Redbox will have to acquire through “alternate means” is “A Very Harold & Kumar Christmas,” which comes out on DVD on Feb. 7.
Separately, Redbox announced Tuesday that it extended a deal to feature its kiosks at 3,700 Wal-Mart stores through January 2015.