Paramount Realizes Exclusive DVD Availability Windows Don’t Help Sales; Will No Longer Delay DVDs for Redbox
Posted on Thursday, June 17th, 2010 by Russ Fischer
Over the past few months, movie studios like Universal and Warner Bros. have decided that the best way to increase their DVD revenue is to establish exclusive ‘sell-through’ windows for new films. So we’ve seen Netflix agree to wait 28 days before sending new Warner Bros. films to subscribers, and Fox and Universal have filed lawsuits against Redbox to control how the company stocks the studios’ films in kiosks.
But Paramount has done some research and come to different conclusions from WB and other studios. In a rare example of a studio doing something that makes sense, Paramount is eliminating any exclusive windows and allowing Redbox to stock the studio’s DVDs from day one. In other words: Paramount is doing business the way it should be done.
The LA Times quotes Dennis Maguire, president of Paramount Home Entertainment: “There were two conclusions we came to…There hasn’t been a cannibalization of DVD sales from Redbox, and Redbox was allowing us to expand our business and ultimately make more money” than if the studio held back its DVDs to Redbox for a period of time. How is it that what should be basic business — getting your product to more people, in more ways — was realized after a year of research by Paramount? But, OK, glad they’re thinking straight.
What’s the benefit for Paramount? Should go without saying, but specifically, the terms of the deal include that the studio gets a percentage of the rentals and a “guaranteed amount of space” in Redbox kiosks. Redbox estimates it will pay Paramount $575m through 2014.
Why do we keep giving space to these stories? Because the post-theatrical market is changing. The traditional video/DVD outlets have been challenged by On Demand, Redbox, streaming media and piracy, and the ways that studios deal with the various revenue options available to them (and the revenue loss of piracy) is already making the post-theatrical market a very different thing than it was ten years ago. This is the part of the business that is going to change the most in the shortest amount of tim.