Retailers take aim at Redbox

Walmart, Target adopt purchase limit on DVD sales

The magic number for DVDs these days is 28.

Earlier this month, Netflix agreed to not offer up movies from Warner Bros. until 28 days after a pic hits DVD or Blu-ray (Daily Variety, Jan. 6).

The deal, which could prompt other studios to ink similar pacts with the video-by-mail service, aims to encourage consumers to keep buying DVDs rather than renting them.

That specific window popped up again this week when Walmart, the biggest seller of DVDs in the country, said it would limit customers to purchasing just five copies of a DVD within 28 days of a film’s bow on the homevid format. The move is expected to significantly affect Netflix-rival Redbox, which offers up movies for $1 a day through 19,000 kiosks set up in supermarkets, drugstores, restaurants and outside convenience stores and libraries, for example.

Redbox, owned by Coinstar, has been stocking its kiosks with DVDs bought directly from retailers or from other suppliers, and is relying on staffers even more so now that it is involved in pending litigation against the major studios when it comes to release windows on new release titles. It has yet to be a major distribber of Blu-rays, focusing mainly on DVDs.

Target is also setting a limitation of five DVDs within the first week of a film’s release. Together, Target and Walmart account for 40% of the DVDs sold at retail, analysts estimate.

“From time to time, we have placed purchase limits on products at stores so that they can be accessible and available to as many customers as possible,” said Walmart spokeswoman Melissa O’Brien in a statement.

A dispute arose in August when Warner Home Video told DVD distributors it wanted to impose delays in sales to kiosk services such as Redbox and mail-order rental services.

Netflix’s deal with Warner Bros. will guarantee it more inventory along with increased access to content for its online streaming service.

Netflix, however, is playing nice with the studios — and realizes it needs to in order to keep growing its company, especially as it increases its streaming service, available through Sony’s PlayStation 3, Microsoft’s Xbox 360 and soon Nintendo’s Wii videogame console.

This week Netflix reported record fourth-quarter earnings as it announced more than 12 million subscribers now use its service.

It earned $31 million in profits during the period, a stellar 36% gain, on a 24% surge in revenue of $445 million.

Netflix added more than 1.1 million customers during the last three months, the most during any quarter in its history. About 48% of the customers streamed at least 15 minutes of Internet video in the fourth quarter.

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