In a multiyear distribution agreement sure to spark controversy among users of Redbox Automated Retail machines, the video rental kiosk operator has agreed to refrain from renting newly released Warner Bros. DVDs for a period of 28 days.
The deal is similar to one Netflix made with Warner Bros. last month, prompting accusations that the video rental site was selling out to the studio. But in return for supporting a sales-only window following the immediate release of DVDs, a practice Warner Bros. hopes will help prompt movie fans to buy rather than rent, Netflix received something in return it badly needs: the rights to show more films over the Web. Netflix is betting big that the Internet is the future of film distribution.
In Redbox's case, the Coinstar subsidiary, whose financial situation Larry Dignan of CNET sister site ZDNet reviewed last week, apparently will receive better pricing on Warner Bros. DVDs.
The Warner Bros.-Coinstar agreement, set to expire January 21, 2012, also includes the dropping of a Redbox antitrust lawsuit against Warner Bros. Redbox had said in recent filings with the U.S. Securities and Exchange Commission that the company was concerned over DVD prices.