Say hello to Redbox, the scariest thing in the film industry, at least for today. If you’ve never heard of this Netflix-for-supermarkets, it can take a while to put together how a shiny red DVD dispenser can make studio execs quake in their last season loafers, so here’s the gist: Redbox rents movies for $1 a day through automated kiosks. If you’ve never seen them, it’s entirely possible you haven’t been to 7-11 in the last year. Or Walgreens. Or Kroger’s. They stock about 40 titles, which they switch up weekly (you can also browse films online), and the emphasis is not on the esoteric.
USA Today breaks it down: Redbox pays about $18 for a disk, and studios get nothing beyond what they make on that sale, which infuriates them, since half their revenue comes from rental and home sales — why choose a $4.50 rental at the video store when you could get a $1 one at McDonalds? Whilst noshing on a Happy Meal?
Hence, lawsuits: Universal told their wholesalers to cut off Redbox, and Redbox countersued and started buying Universal titles at retail. Fox asked its wholesalers to wait 30 days before selling new filmes to Redbox, and today Redbox filed another countersuit against them. Disney, Sony and, as of yesterday, Lionsgate have all pulled an if-you-can’t-beat-em and reached deals with the service. There’s an air of hysteria in the air: Can a subsidiary of Coinstar really bully all the studios into submission? Could it destroy NetFlix? And Blockbuster? (How is Blockbuster even still standing? Their death was predicted 90 dog-years ago.)
The DVD sales bubble is collapsing in on itself fast enough to form a black hole at its center. While the studios keep having to re-figure out how to make money, it’s the shaky, knock-kneed indie market we’re worried about. As Cinetic’s Matt Dentler put it, “consumer expectation that a movie rental should now always be $1” is a bad model for indies. Then again, the folks contemplating the kiosk probably don’t care about indie rentals to begin with. In a perfect world, they would someday, but — like Jonathan Rosenbaum’s oft-expressed position that if only Hou Hsiao-Hsien films opened on 3,000 screens alongside blockbusters, consumers would dig them — that’s just not the case. The studios can sweat this one out; indie DVD firms should just keep chugging along, figuring out new ways to make the small part of the pie work for them.