DVD kiosks have movie studios seeing red

Move over Netflix. Redbox, an Illinois-based company that rents movies for $1 a day via kiosks in stores like Wal-Mart and fast-food restaurants, is under fire from movie studios claiming that the vending company is cannibalizing DVD sales and is devaluing the overall packaged product.

Three film studios--20th Century Fox, Warner Brothers and Universal--are lobbying against the growing kiosk giant refusing to sell DVDs to them until 28 days after their initial release date. Redbox is fighting back against the month-long blackout period, suing the trio on antitrust grounds.

Other studios, like Paramount and Sony Pictures, have signed distribution deals with Redbox while Walt Disney allows third-party distributors to sell DVDs to the Coinstar-owned company.

Meanwhile, Blockbuster has launched its own version of $1 per night movie rental kiosks in stores throughout Connecticut and Massacusetts. The company plans to deploy more than 2,500 Blockbuster Express DVD stations in 2009 for a total of 10,000 kiosks by mid 2010.

Both Redbox and Blockbuster Express kiosks hold about 500 DVDs and generally offer new releases. Accounting for 19 percent of the DVD rental market, vending sales are still trumped by rent-by-mail services like Netflix which rules 36 percent of the market and brick-and-mortar stores like Blockbuster continuing to dominate with 45 percent of rental profits.

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