20th Century Fox Gives Redbox The Smackdown

Published 6 years ago by , Updated August 14th, 2013 at 4:36 pm,

redbox fox 20th Century Fox Gives Redbox The Smackdown

Earlier this summer, 20th Century Fox had a very unfortunate leak of their blockbuster tentpole film, X-Men Origins: Wolverine. I was very apathetic at the time it happened and couldn’t care less that Fox thought they were losing money on the movie. All I cared about was that I got the watch the movie early, green screens and stunt wires be damned!

That’s when I found Screen Rant and thanks to its chief, Vic Holtreman, realized the error of my ways and repented, never to watch a downloaded pirated movie again (Thanks Vic!). I then found a new way to watch movies and it included a trip outside my local Walgreen’s to rent a $1 movie from Redbox. If you haven’t had a chance to rent from Redbox yet, give it a try. Those big, bright, red movie vending machines are becoming more prevalent than Starbucks and in a time of recession when people are looking to save money on family activities, $1 movies are very appealing.

I started to understand how 20th Century felt and actually went to their side of the court because I felt they HAD been wronged. Now, I can’t help but think that Fox is playing the studio greed card with this latest news from Ben Fritz at the LA Times in the Company Town blog. The big studio execs have decided they no longer want Redbox to be able to offer their newly released movies to the viewing audience until after thirty days from the initial DVD released date; so they have instructed wholesalers to no longer sell their movies to Redbox until after the required time has elapsed.

The WHAT, here, is not as important as the WHY. Redbox works through a revenue-sharing agreement with many of the major studios, which basically means they get prime movies at a vastly discounted rate through wholesalers and then give or “share” the revenues back to the studios over the course of an agreed upon time limit, but they own all the DVDs. Take Sony for example; according to Fritz and Redbox’s press site, Redbox has reached a deal with Sony that guarantees $460 million in revenue-sharing over the next five years. That’s a lot less than Redbox would have to pay for the same movies at retail prices.

The reason I said earlier that Fox is playing the greed card is because that same deal is unappealing to them. Look at what a studio spokesperson for Fox sent in an email:

“The basis of this position is to continue to provide the consumer with broad title choice and access to Fox movies while maintaining the quality image and value perception of Fox movies. Our desire is to maintain for Fox movies a thriving network of distribution serving all types of consumer preferences, on reasonable business terms for Fox as well as our distribution partners.”

Ok, first laughable point is the part where they strive to maintain “the quality image and value perception of Fox movies.” Please don’t act like all of a sudden quality and image are your major concern. The quality of Wolverine was sub-par at best and do I even need to mention the recent quality failures of The Day the Earth Stood Still, Max Payne, Mirrors, The X Files: I Want to Believe, Meet Dave, Meet the Spartans, and Epic Movie? Good gravy I only went back to 2007 and the list doesn’t get shorter!

Second laughable point would be the last line where they want to maintain a “thriving network of distribution serving all types of consumer preferences, on reasonable business terms for Fox as well as our distribution partners.” Let me paraphrase that for you: We want more money because we think OUR stuff is worth more than other people’s stuff. Does anyone at 20th Century Fox think for one second the consumer is boondoggled by their fancy words pretending to care how much we pay for things? If they truly cared then why not leave Redbox alone and let the lowly consumer pay $1 a night to rent a movie?

Rollie Fingers Chase Carey, President and C.O.O. of Fox’s parent company News Corp, had this to say after their fourth-quarter earnings report:

“Having our [movies] rented at $1 in the rental window is grossly undervaluing our products.”

They care more about how much they get paid more than how much the consumer pays. No big surprise there really. They are, after all, a business trying to please Wall Street and investors with good quarterly earnings and fiscal prowess. If they came right out and said that, then I wouldn’t have such a problem with what they are doing now. Instead they shroud their actions in the guise of consumer advocacy.

Redbox isn’t just feeling the heat from Fox either; Universal is currently in court with Coinstar Inc, Redbox’s parent company, for telling wholesalers to stop selling to Redbox unless they agree to a forty-five day window for new releases. Time Warner CEO Jeff Bewkes is throwing in his two cents as well with this statement:

“In general, we think there may well be a role for $1 rental kiosks just like $1 movie theaters.”

Redbox isn’t being quiet on this issue and good for them for standing up to the major media conglomerates. In a press release yesterday Mitch Lowe, president of Redbox had this to say in a press release:

“We were informed of Fox’s position late today. Redbox stands behind our convenience and value that we offer consumers, and we’re pleased to make DVDs available the day they are released.”

Consider nose officially thumbed to Fox. Bravo!

Here’s my take on the whole situation. According to a Redbox press spokesperson,”Redbox employs various acquisition strategies. [We] purchase the [DVDs].” That being the case, I fail to understand how movie studios think they can dictate policy to another business based solely what they think their own product is worth? It’s worth exactly what the consumer is willing to pay for it. That’s the whole idea behind a competitive market, to lower the cost to the consumer while providing the same product or service while still turning a profit.

First, Blockbuster came out and allowed us to rent movies instead of buying them. Then Netflix changed the market by allowing us to keep them as long as we wanted for a monthly fee; they were able to offer this service by ditching the brick-and-mortar business model for a more streamlined warehouse approach. Now, Redbox has upped the ante by giving the consumer both options and value by using a vending machine approach. A competitive environment is good for business and good for the consumer.

As far as Redbox being compared to $1 theaters, it’s not even the same business model. Theaters rent the movie from the distributor paying them for the right to show the film in a large venue. The distributor decides whether they want to allow the theater to show it or not, so if they don’t want audiences seeing a film for $1 then they just don’t give the theater a copy of the film reel.

Redbox rentals (any rental for that matter) are different because the DVDs are purchased, owned and then rented, all legally. As long as the movie is not being shown outside of someone’s home, studios don’t have a say in what is done with that physical disc AFTER a legal purchase has been made (which is not the same as saying the buyer can burn infinite copies of a movie). Where do the studios get off telling Redbox what they can do with their own property? What if other businesses decided to take this approach to the sale of their products? What if Kellogg’s decided that Wal-mart wasn’t charging enough for Rice Krispies? Could they then tell wholesalers to stop selling to Wal-mart until the superstore started charging more? That would be ludicrous and would never fly.

So do you think the studios have the right to dictate how much Redbox can charge? Or do you agree that 20th Century Fox and other studios are over-stepping their bounds?

Source: LA Times

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  1. I quote Robert Loggia In “Scarface”…

    “Never undersetimate the OTHER GUY’S GREEEEEEED!”

  2. This is standard operating procedure for FOX. Manipulation and control is they’re bottom line.

    I’m curious as to how much FOX wants Redbox to charge? That seems to be they’re main problem yet they don’t mention a proposal.

    (IMO) The Wolverine copy wasn’t a very unfortunate leak, it was a planned event and it worked out in FOX’s favor. If it was a random leak, who leaked it. To this day we still have no suspects.

    Maybe it was Bin Laden who leaked it ???

  3. Quality schmaulity, they just want more money, those bastards, lol. Get netflix people, unless Fox doesn’t like their movies being rented out free on a monthly membership basis, lol.

  4. Fox has given us a lot of great movies as well as a lot of bad movies, they are a business out to make money. They’re just not shy about reminding us about that, lol. Again, those bastards… I do hope they don’t read my comment and get any funny ideas about netflix too because I might sign up for an account…

  5. Your last paragraph has nothing to do with the issue at hand. Fox and Universal are not trying to tell Redbox what they can and can’t do with their own property. I am not trying to say the studios are not being greedy, but they are definitely within their rights to limit who purchases their product and when. Using your Rice Krispies example, if Kelloggs believed that Rice Kripies was a $5/box brand of cereal and was trying to create that image, they can definitely control who they sell to. Businesses have a right to control their brand and image. Now that doesn’t mean anyone will buy their $5 boxes of cereal, but hey, its what they want. Same with the studios. If they think their movies are worth more than anyone elses, then so be it. Redbox should just counter and say, fine we just won’t carry any of your movies ever. Remember that revenue sharing thing? Yea, its gone now Fox. I know many people that rent SOLELY through Redbox. If Redbox didn’t carry Fox movies, then they just wouldn’t rent those movies, instead selecting something else in the Redbox machine.

    Again, Fox isn’t overstepping any bounds or illegally pressuring others, but they are being really, really stupid in the alienation of their customers.

  6. First: I DIDN’T watch the pirated Wolverine movie. Didn’t see the real one ’til it had been out 3 weeks. Second: I didn’t care that it got pirated, and still don’t. I don’t view the theft of their movies as any worse than the thousands of misleading trailers or disappointing movies studios have tricked us into seeing. Whether it’s through concerted media conglomerate campaigns (studios owning magazines and talk shows and ramming their contract actor of the moment [Cooper, Aniston, etc.] down our throats), nothing about how they operate is ethical, irregardless of its legality. This is just like American cell phone companies “locking” their phones: eliminate consumer choices, and they’ll have no choice but to buy what you are willing to sell them, at whatever price you wish to sell it. That isn’t how free markets are supposed to work. And 3rd: f~€|< FOX. They’re the most rat-bastardized of all the studios.

  7. John knows what he’s talking about here. Fox isn’t telling them they can’t go to BJ’s, buy them for the same price as everyone else, and then rent those copies like the brick-and-mortar video store I used to work at did. You’re right–what’s done with your private property, as long as it’s legal, isn’t the business of the intellectual property owner. Fox is simply saying, to the people with whom they have a business relationship, “Don’t make this available at wholesale to a company with whom we haven’t been able to come to an agreement.” That seems completely within their rights to me, if a little petty and ill-advised. They’re not telling Redbox to charge more money, only saying that given their druthers they wouldn’t want their stuff out there at the current price point. But if the deal they made with Redbox was good enough I guarantee that wouldn’t be an issue. Corporate pride can be bought easily, just not cheaply.

  8. So if the studios were to go their wholesalers and tell them “Don’t sell to Compnay X becasue they are run by a black man”, that would be ok? I mean, according to your statement John and Russ that is what I take it to mean. The studios have every right to sell or not sell if they are acting as their own distributor. They are not in this case, they are using a middle man and they should not be allowed to tell that middle man who they can and can not sell to.

  9. Paul, a company can state whatever terms they like in an agreement with another company. The studios have probably set terms in their agreements with the distributors/wholesalers that state that rental companies like Redbox are not allowed to purchase the DVDs for a set amount of time after they hit retail shelves. If the distributors do not agree with the studios’ terms, they are well within their rights to not do business with them. The studios will just find another distributor that WILL agree to these terms. This is how free markets work, providing services at the cheapest prices with agreeable terms will always win. Redbox currently IS suing the studios for being unfair, but that is a civil suit, not a matter of legality and breaking the law. There are no current laws, to my knowledge, preventing the studios from doing this. However, if a judge decides that the situation applies to antitrust laws or something else then the situation will change.

    As far as your comments about racial prejudice, of course there are laws against racial, gender, and disability prejudices, but unless it is obvious the studios are doing this to Redbox out of prejudice, there is no basis for that argument. Again I don’t agree with what the studios are doing, but they are within their rights to do so, until the time comes that a court of law finds otherwise.

  10. One main reason we are having problems with the economy is that we have prostituted value to volume. In response to labor unions pressing manufacturers, our moron government leaders passed NAFTA and GATT, parasites starting with Wal-mart have used these to export our value in the way of manufacturing in the USA to China for volume. Which in turn narrows the playing field for small businesses to make a buck, and allows companies like Wal-Mart to make all the money. When only a select few make all the money, the economy ultimately callapses, because it takes everybody making money on a fair playing field to have a strong economy. Now we have a new parasite called “redbox” who wish to prostitute value for volume. Which will ultimately narrow the playing field to small businesses (except BlockBuster) to make a buck, or turn to the internet, and further corrode the value of movies. Then again, why should these actors make so much money, it’s against the socialist way.

  11. Meanwhile you can get the same movies for free and get to keep them longer at the library, all, guess what, legally. Being just a bit vigilant in reserving them means you’ll never have to pay (except for the taxes the library runs on) for a movie again, even the newest releases.

  12. I think it’s ridiculous that Redbox is being forced, apparently, legally, to let their purchased DVD’s sit in a warehouse for 45 days before they can rent them. I noticed that Amazon has the latest releases available for streaming immediately, for a higher price of course. I’m still waiting for Redbox, if for no other reason than principle.