06-07-2012, 04:02 PM
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Article: Netflix joins Redbox to defy Disney's new DVD policy
Is Disney shooting itself in the foot by holding back DVD releases? Not really, but DVD rentals seem to be going away and I think they are trying to "thin the heard" of DVD rental kiosks and the last of the storefronts.
Netflix joins Redbox to defy Disney's new DVD policy
By Ben Fritz June 7, 2012, 12:34 p.m.
Netflix is joining Redbox in defying Walt Disney Studios' attempt to stop DVD rentals for four weeks after the discs go on sale.
Disney recently decided not to provide its discs to the nation's largest rental companies until 28 days after they hit store shelves, adopting a policy similar to those of 20th Century Fox, Universal Pictures and Warner Bros. (Warner's so-called "window" is even longer: 56 days).
The studios believe the delay can help boost home entertainment revenue by steering consumers toward more profitable DVD purchases and video-on-demand rentals.
Fox, Universal and Warner reached agreements with Netflix in which the rental company doesn't offer the movies to its customers until after the window. In exchange, the studios provide a healthy supply of DVDs at the end of the period at a discounted rate.
But Disney and Netflix were unable to come to terms on such a deal, as the Burbank studio apparently wanted more favorable terms than those of its competitors, said a person familiar with the matter who was not authorized to discuss it publicly.
As a result, Netflix is now buying copies of recent Disney releases, including "John Carter," from other retailers rather than directly from the studio. All of Netflix's copies of Disney's big-budget flop, which came out June 5, are already out to subscribers and there is a waiting list.
Disney is the only studio at loggerheads with Netflix over the window issue, but it's not the only one fighting with Redbox. The kiosk rental company refused to accept Warner's demand that it wait 56 days to rent new releases, as its business is heavily dependent on having fresh movies. It is now stocking its machines with Disney and Warner discs that it purchases from retail stores.
Such negotiations ultimately amount to a high-stakes game of chicken. Under the "first sale" legal doctrine, studios can't forbid companies from renting DVDs that they legally purchase.
But buying the DVDs from retail stores or other wholesalers, as Netflix and Redbox are doing for Disney titles, costs the rental outlets several dollars more per disc than buying it directly from the studio. Disney appears to be hoping that as a result, Netflix and Redbox will stock fewer copies and may eventually decide to agree to the studio's terms.
Blockbuster, the only remaining national rental store chain, is also defying Disney. "John Carter" is already available to rent on its shelves.